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Transneft reduces oil transit through Ukraine amid crude oil quality complaints

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World Pipelines,

Oil transit through the territory of Ukraine via the Druzhba pipeline went down during the first four months of this year in the wake of consumers’ complaints about the quality of crude oil, an official Transneft spokesperson told TASS.

“Reduction at Druzhba’s northern line reached 1.4%; at the southern line the volume of oil transported to Hungary fell by 18%, while the volume of oil pumped to Slovakia decreased by 8%,” he said. The company specified that during the four months, exports to Hungary contracted by 280 000 t and exports to Slovakia shrunk by 130 000 t.

The company reported that Hungarian consumers explained the reduction of consumption as due to the quality of Russian crude oil: whereas its sulfur content presently stands at 1.75%, they would prefer a maximum of 1.5%. Russian crude oil’s sulfur content is within the normal values, but this quality does not suit them.

Prior to this announcement, Ukrtransnafta said that oil transit through Ukraine had sunk by 9.3% to 4.023 million t during the four months.

According to Anatoly Golomolzin, Deputy Head of the Federal Antimonopoly Service (FAS) of Russia, consultations held with Transneft and the Ministry of Energy of the Russian Federation on the issue of the sulfur content in the crude oil exported via the Druzhba oil pipeline give hope that the quality of the crude oil supplied via this pipeline will not change. Prior to that, TASS sources who attended the said FAS meeting had suggested that the sulfur content in the crude oil transported via the Druzhba oil pipeline may reach 1.8% in 2018. Currently, the standard maximum sulfur content in the pipeline for the Urals brand stands at 1.6%.

Transneft earlier proposed to the Ministry of Energy of Russia to form a new export oil grade under the working title of Urals Heavy. The company is ready to provide up to 30 million t of high sulfur crude oil (with a sulfur content of 2.3%) to ship through Ust-Luga. This high sulfur crude oil flow should presumably be supplied from Ulyanovsk, Orenburg and Samara regions as well as from the Republic of Bashkortostan.

However, in March Alexey Texler, 1st Deputy Minister of Energy, said that the Ministry of Energy did not think it necessary to return to the issue of forming a separate flow for transporting heavy oil, since the quality of the oil keeps rising. He also underlined that the decision to set aside a separate flow would lead to significant budget losses.

There are several main oil grades in Russia: Urals heavy mix (the price is discounted from Brent), Siberian Light oil (from Khanty-Mansi Autonomous Area) and ESPO (an East-Siberian oil grade).

“Other Russian grades include REBCO, Sokol (Sakhalin-1), Vityaz (Sakhalin-2) and ARCO, an arctic grade (Prirazlomnoye field developed by Gazprom Neft).

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Europe pipeline news Crude oil pipeline news