September 2019, Vol. 246, No. 9

Global News

Transneft Sets Cap on Compensation for Pipeline Contamination

Russian oil pipeline monopoly Transneft said it has set a cap of $15 per barrel for compensation for damages stemming from contamination in its network.

The contamination, first discovered in April in Belarus, led to the stoppage of Russian oil exports via the 1 million barrels-per-day Druzhba pipeline and a reduction in oil production in Russia, one of the world’s top producers of crude.

Three market sources familiar with the buyers of Russian Oil told Reuters that Transneft’s announced compensation cap is too low. “This is nonsense. The compensation should be higher and depend on whether the oil was supplied by the pipeline or by sea,” said one source.

Buyers along the Druzhba pipeline to Germany, Poland, Hungary, Slovakia, Ukraine, Belarus and the Czech Republic discovered chemicals in the oil. The Baltic port of Ust-Luga was also affected. 

Poland’s PKN Orlen said of Transneft’s offer: “In connection with the contaminated Russian oil, we incurred certain costs. We continue to estimate them. When we have precise calculations, we will ask suppliers for compensation.”

Belarusian state oil firm Belneftekhim said it considered the decision by Transneft to be “one-sided.” P&GJ

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