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Julianne Geiger

Julianne Geiger

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Russian Crude Could Still Be Dirty By Mid-2020

As Poland’s biggest refiner publicly criticized the deteriorating quality of Russian oil, a suspect in the investigation into pipeline contamination that has severely disrupted Russian supplies is seeking asylum in Lithuania. 

Earlier today, Reuters cited an official at PKN Orlen, Poland’s biggest refinery, as saying that Russian crude oil has been deteriorating in quality--despite the ongoing cleanup following that April contamination scandal that disrupted supplies and launched a tense backlash among buyers. 

At the same time, one of the key suspects in the ongoing Russian investigation into the contamination, Roman Ruzhechko, is seeking political asylum in Lithuania--where PKN Orlen also has a refinery, Reuters reports separately. 

Just over a week ago, Lukoil, Russia’s second-largest producer, managed to fully restore supply volumes after contamination on the Druzhba oil pipeline disrupted Russian crude supplies in late April. 

The oil was contaminated with organic chlorine, a substance used in oil production to boost output but dangerous in high amounts for refining equipment. The amounts of the chemical were found to be at levels much higher than the maximum allowable amount.

Having launched an investigation into the incident, Russia concluded that the contamination was deliberate, and Ruzhechko is one of the main suspects. 

In fact, Russia believes this was a criminal conspiracy coordinated in part by the small oil transport company of which Ruzhechko is an executive.

Russian Transneft owns and operates all of the country’s oil pipelines, including Druzhba, and Ruzhechko is suspected of having overseen a company that was pumping toxic chemicals into the network.  Related: Iran Takes Revenge: Seizes British Oil Tanker

But that same company is also said to have received documentation from Transneft that its oil deliveries were clean, according to sources cited by Reuters

It remains unclear whether Lithuania will extradite Ruzhechko, who has been detained by the authorities on an Interpol warrant. Yesterday, his three-month detention was authorized, and Russia has 40 days to officially request his extradition. 

In the meantime, the Polish pipeline official told Reuters that Russian oil was “deteriorating, but still worth being processed”. 

Russia is now preparing to dilute the contaminated oil stuck in the pipeline with clean crude, but this strategy is being challenged, with Russian oil companies reportedly saying it would undermine the quality and price of exports for a longer period. 

According to some Russian oil companies, it might take until the middle of next year to fully flush out the pipeline using this strategy. 

Instead, Russian oil companies argue that the pipeline should be emptied entirely and the tainted crude sold for a major discount. 

Sources speaking to Hellenic Shipping News on condition of anonymity said it was unlikely that their objections would stop Transneft from going through with its dilution plan beginning next week. 

By Julianne Geiger for Oilprice.com

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