Glencore, BP derived from Russian processed stains

President Vladimir Putin said oil pollution in April had damaged Russia’s image as a reliable supplier. Transneft and Rosneft have been at the forefront of efforts to resolve the situation.

At least 6 cargoes sailing from Ust Luga remain unsold, according to trade sources. Glencore is stuck with 500,000 tonnes on a very large crude carrier (VLCC) Amyntas and two smaller tankers – Searanger and Searuby, according to sources and the Refinitive Eikon shipping system.

Exports through the Druzhba pipeline carrying oil to Germany, Poland, Hungary, Slovakia, the Czech Republic, Ukraine and Belarus were banned. The Baltic port of Ust Luga loaded about 15 cargoes or 1.5 million tonnes of contaminated oil to Western buyers.

BP and Glencore are trying to sell about 600,000 tonnes of Russian stained oil more than three months after the contamination was discovered, according to six trade sources.

The Russian oil industry was mired in a crisis in April after about 5 million tonnes of oil for export was found to be contaminated with organic chloride, a chemical used to help extract oil but that could damage refining equipment.

BP and Glencore declined to comment. Rosneft did not respond to a Reuters request for comment.

They cannot claim compensation until they sell the oil.

“You cannot file a claim against Russia until you have sold your oil and calculated your losses,” said one trading source.

BP tried to sell its Fsl Shanghai cargo in a tender earlier this month, but failed, according to the same traders. BP and Glencore both bought oil from Russian state-owned Rosneft.

The oil was transported by the Transneft pipeline monopoly, which said it was ready to pay compensation to Russian carriers that would in turn pay compensation to foreign buyers.

Russia’s Transneft and the Ministry of Energy did not respond to Reuters’ requests for comment.

So far, Transneft has only agreed to pay $ 15 a barrel in compensation, or roughly a quarter of the cost of oil, for Kazakhstani oil producers whose barrels were contaminated en route to Western markets.

“Many Russian oil buyers believe that $ 15 a barrel will not be enough,” said a trading source at a main.

Some customers who received stained oil consider $ 30 a barrel as reasonable compensation, two traders involved in the discussions said.

Some refineries, including Total Leuna in Germany, were forced to temporarily suspend Russian oil refining for fear of damaging refining equipment.

Another source with a major Western buyer said consumers will likely make claims in the fall when they finally manage to refine the contaminated oil.

Oil firms must mix a barrel of oil soaked with as much as 10 barrels of pure oil to meet required quality standards and avoid damaging equipment, sources said.

Total, for example, discharged its two oil-contaminated deposits in Rotterdam and Lithuania for further storage and mixing and refining.

WOODEN TILE

Russian oil supplies along the Druzhba pipeline to Germany, Poland, Hungary, Slovakia and the Czech Republic have resumed in July after weeks of significantly reduced supplies.

Russia exported 24% less oil to Germany in the first six months of 2019, year after year, due to pollution even though it still remained Germany’s top crude supplier.

Some refineries such as Total Leuna and Poland’s PKN Plock are mixing stained oil with purer barrels and refining it.

Rosneft’s Schwedt refinery in Germany has refused to receive contaminated oil, according to traders. Rosneft declined to comment.

Belarus has completed a complete cleanup of its system after Transneft pumped about 2 million tonnes of contaminated oil back into Russia, Transneft and traders said.

Transneft now has to dilute oil with cleaner supplies for domestic refineries and export destinations.

The pipeline monopoly also has not signed final compensation documents with Kazakh producers to begin repaying the $ 15 a barrel fee, traders said./Investing.com

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