MOSCOW, August 21 (TASS) - The incident with oil pollution in the Druzhba pipeline, in particular, affected Rosneft’s plans to reduce net debt in the second quarter of 2019, the oil company’s First Vice President Pavel Fedorov said during a conference call on Wednesday.
“The incident with Druzhba influenced the dynamics of net debt reduction, we confirm this,” Fedorov said, answering the relevant question.
In May 2019, Fedorov said that the company could reduce debt by $2-3 bln in the second quarter. However, Rosneft’s net debt for the second quarter rose to $ 5.7 bln.
Otabek Karimov, Vice President for Commerce and Logistics, during the presentation of the results of the first half of 2019, noted that it is still difficult to fully estimate the damage from the Druzhba pipeline pollution.
According to him, contaminated oil ended up in eight Rosneft tankers in the port of Ust-Luga.
“Therefore, the entire chain is still difficult to evaluate. There are several factors. The first one is the contaminated oil that got into the tankers, as I said. Most of the oil in the tankers that got the contaminated oilis held by the contractors and has not been sold yet. The second factor is a reduction in production, because the Transneft pipeline system could not receive all the oil that the company produced. Thirdly, there are other factors, such as the lost profit from a decline in refining, in particular on our German factories,” he said.
Russia’s top oil producer was forced to reduce crude oil production by 1.7 mln tonnes during temporary restrictions on the oil intake into Transneft’s trunk pipeline system in the period between May 1 and July 15, 2019. Earlier the company proposed to include losses from the forced reduction of output due to off-spec oil getting into the pipeline in the total amount of damage from contamination of the Druzhba pipeline.
Druzhba pipeline case
In mid-April, the Belarusian concern Belneftekhim reported a sharp deterioration in the quality of the Russian oil running through the Druzhba pipeline, which supplies oil to Belarusian refineries and provides its transit to Europe via Belarus, Poland and Ukraine. Transit and refining were suspended. Minsk and Moscow started intergovernmental talks on compensation issues in May. Clean oil pumping from Russia to Belarus resumed in May.
On June 19, the new oil contamination was registered on the pipeline segment running from Belarus to Poland. Oil throughput over the segment controlled by Poland’s pipeline operator PERN was suspended and restarted on June 20.
Transneft is currently discussing with partners compensation for damage caused by oil pollution. In late July, the company’s board of directors approved the maximum amount of compensation to shippers for oilpollution in the Druzhba pipeline — $15 per barrel. Transneft also noted that the compensation settlement mechanism would be same to all shippers.