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Russia Halts Oil Pipeline Exports To Europe Via Ukraine

Russian oil exports through the Druzhba pipeline via Ukraine were suspended in early August due to a problem with transit fee payments, Russian news agency Interfax reported on Tuesday, quoting a statement from Russia’s oil pipeline operator Transneft.

The southern leg of the Druzhba oil pipeline from Russia to Europe passes through Ukraine, and oil is being delivered to refineries in Hungary, Slovakia, and the Czech Republic. The northern branch of the pipeline crosses Belarus and ships oil to Poland and Germany. Oil transit from Russia via the northern leg of the Druzhba pipeline continues, Interfax says.

Transneft says the reason for the suspension of pipeline oil exports via Ukraine is that a payment it had made to Ukraine’s Ukrtransnafta on July 22 for the transit fees for August didn’t go through and was returned to Transneft’s account on July 28.

“The situation is complicated because European regulators haven’t come up yet with a unified position on how banks should act in various jurisdictions, and they haven’t developed a process to issue permits, either,” Transneft says, as quoted by Interfax.

Therefore, Russian oil exports via Ukraine were halted on August 4, the company added.

The suspension of Russian oil exports via pipeline opens another confrontation between Russia and the EU on Russian energy deliveries to Europe.  

The EU, when announcing the embargo on Russian oil imports—to come into force at the end of this year—exempted imports of Russia crude and petroleum products via pipeline because several landlocked countries, such as Hungary, the Czech Republic, and Slovakia, are highly dependent on pipeline oil supply from Russia. EU member states dependent on Russian pipeline oil were given a temporary exemption to import Russian crude via pipeline until the EU Council decides otherwise, but were not allowed to resell such crude oil and petroleum products to other Member States or third countries.

Now it’s Hungary, the Czech Republic, and Slovakia whose supplies from Russia have been cut. Russia has also cut off natural gas deliveries to several EU member states and has slashed supply via Nord Stream to Germany to just 20% of the gas pipeline’s capacity.  

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By Tsvetana Paraskova for Oilprice.com

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