LUKOIL, MOL settle Druzhba dirty oil spat

Lukoil MOL Druzhba dirty
Running a test for contaminants as Druzhba crude enters Hungary. Source: The Budapest Business Journal

Russia’s Lukoil and Hungarian energy company MOL will sign a settlement over dirty oil that left high levels of organic chloride in the Druzhba pipeline.

“We are proud to say that we are the first country which managed to close the negotiations in this respect,” Hungary’s Foreign Minister Peter Szijjarto said on Tuesday. Szijjarto told a news conference also attended by MOL and Lukoil executives. Russian President Vladimir Putin will visit Budapest on Wednesday.

A high level of organic chloride was found in late April in Russia’s Druzhba pipeline, which connects Siberian oilfields with Belarus, Ukraine, Poland, Germany, Czech Republic and Hungary. Dirty oil in the Druzhba disrupted exports from Russia to the West and has led to protracted negotiations over compensation, with LUKOIL and MOL first to settle.

The the organic chloride contaminants result from compounds used in by the oil industry to boost extraction from oilfields by cleaning oil wells and accelerating the flow of crude. These compounds must be removed before oil enters pipelines as they can destroy refining equipment or, at high temperatures, create poisonous chlorine gas.

Tests by Belarus on oil from Druzhba showed organic chloride levels of 150-330 parts per million (ppm) between April 19 and 22, according to Gomeltransneft documents seen by Reuters, well above the maximum 10 ppm allowed by Transneft.

Reuters reported that contaminated oil had been found in Belarus, Poland, Germany, Ukraine and the Baltic port of Ust Luga, all of which are served by the Druzhba network. Reuters cited multiple sources involved in trading Russian oil.

Russian pipeline monopoly Transneft said the contamination happened in the Volga region of Samara and blamed unnamed “fraudsters.” President Vladimir Putin was quoted in the media in spring that Transneft lacked a proper mechanism to prevent contamination

The Druzhba pipeline, which can pump 1 million barrels per day or the equivalent of 1 percent of global oil demand, was built in Soviet times and serves refiners in Germany, Poland, the Czech Republic, Slovakia, Hungary, Ukraine and Belarus.

See also: Russian crude produced at post Soviet high

Source: Reuters