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Russia Meets Ukraine, Belarus, Poland To Discuss Tainted Oil

Pipeline

Russia is holding talks with Ukraine, Poland, and Belarus over a contamination of its crude oil that had Poland, Slovakia, Ukraine, and Belarus shut down their sections of the Druzhba pipeline earlier this week, Reuters reports. The discussion will focus on the removal of tainted oil from the pipeline.

The problem has strained relations between Moscow and Minsk as Belarus was the first to report the problematic oil last week, warning that it could damage refinery equipment. 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.

A TASS report from yesterday quoted Russian Deputy Prime Minister Dmitry Kozak as saying that Belarus would be provided with clean oil on Monday, adding that “A considerable portion of poor quality oil has already been evacuated to tanks in the territory of Russia.”

The official also said, "The issue of compensation has not been raised so far. The issue was put forward regarding the need to increase indicative balances for oil product supplies to the domestic market. Discussion is in progress."

Though a rare occurrence, oil contamination could have longer-lasting effects on European refineries as not all of them have enough oil in storage to keep operating as usual. Germany’s refining industry is fine for the time being with ample supplies, but Polish refiners could face some challenges in finding alternative crude oil supplies.

The Druzhba pipeline that runs from Russia to Germany with branches into countries along the way has the capacity to transport up to 1 million barrels of crude daily. Yet the contamination has also been found in tanker cargoes loaded at the Ust Luga port.

According to Reuters trading sources, at least five vessels belonging to Rosneft, Surgutneftegaz, and Kazakh companies have set sail from the terminal with contaminated cargo. The buyers of the cargoes include Total, Trafigura, Vitol, and Equinor.

By Irina Slav for Oilprice.com

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