Petroleum Giant Rosneft Failed to End Tainted Oil Crisis

On Tuesday, Kremlin-run petroleum giant Rosneft said that Transneft, which manages Russia’s oil pipelines, was unsuccessful to deliver an answer to a tainted-oil crisis.

Since this news blew up, the problem has slashed the country’s crude exports for more than four months.

In mid-April, the Russian Druzhba pipeline, which pumps 1 million barrels of oil per day to western and eastern Europe, was seen to be contaminated with organic chlorides.

A couple of months later, Russia cleaned up the pipeline and returned supply. Transneft, the state oil pipeline monopoly, has assured to compensate energy companies for contamination-related losses.

On Tuesday, in rare comments, Rosneft indicated that the pipeline firm had to fix the problem still.

Meanwhile, Rosneft’s petroleum production and incomes took a hit from oil consumption limits that were imposed by Transneft during the crisis.

In a statement, Rosneft said, “The future of tainted oil remains unclear, claims by companies and their business partners are unresolved, and the issue of guaranteeing oil quality during transportation has also yet to be resolved.”

He also added, “The risks to Russia’s image as a reliable supplier are growing.”

Rosneft, regulated by powerful chief executive Igor Sechin, stated several oil-importing countries.

The countries included Poland and some Mediterranean ports that had started to consider other choices for importing oil.

Rosneft said, “Transneft is mixing oil from different producers on its own. Given that there is no ‘oil quality controller’ with the pipeline system, companies continue getting a blend that may not correspond to the oil quality supplied initially.”

Campaigns of Supplying Oil Containing Organic Chlorides

In August, Rosneft indicated that Transneft gave out a notification. He said that it planned to supply petroleum containing organic chlorides of more than to 6 parts per million (ppm).

The supply is to the refineries in central Russia and the Baltic Sea port of Primorsk.

Russia consents the contamination of up to 6 ppm. But many European refineries may not process oil with organic chloride content above 1 ppm.

Rosneft said, “This means export supplies via Primorsk will have prohibitive (ppm) levels for European refineries.”

So far, Transneft has settled to pay $15 per barrel in compensation or roughly a quarter of the cost of the oil. The payment is to Kazakh producers whose barrels got contamination en route to Western markets.

In April, President Vladimir Putin said the oil contamination had dented Russia’s image as a reliable supplier.

Elsewhere, Russian state-owned pipeline monopoly Transneft criticized oil producer Rosneft recently. It was after claiming it had delayed quality controls.

In addition, the claim of unconfirmed damages got a rejection.

Transneft indicated that Rosneft had been grudging to help resolve a contaminated oil crisis in the Russian Druzhba export pipeline.

The oil contamination was the largest in the history of the Druzhba pipeline.

The company has been around since the 1960s. It has undermined Russia’s reputation as an energy supplier and led to the postponement of operations at several oil refineries in Europe.

Old conflicts between the two companies which are both managed by close allies of Russian President Vladimir Putin, Rosneft’s Igor Sechin and Nikolai Tokarev at Transneft, were also revived.