Druzhba Pipeline Flows Resume Full Volume
(P&GJ) – Russian pipeline monopoly Transneft announced that crude flows have resumed in full on its Druzhba pipeline.
In June, the vice president of Transneft, Sergey Andronov, said that flows would resume July 1, and the company has met that deadline. “As planned, as of July 1, crude supplies have resumed in full volume applied for,” Transneft’s spokesman Igor Dyomin said in a statement to the Financial Times.
Flows on the company’s largest pipeline, and one of the largest in the world supplying up to 1 MMbpd to several countries across Europe, have been disrupted for more than two months. In April, organic chlorides were discovered in the crude at volumes that could be damaging to refineries which caused several countries to suspend deliveries.
Operations on the line partially resumed several weeks later, as Belarus and Poland reported receiving clean flows towards the end of May. Several other countries began reporting clean flows in June.
The Druzhba Pipeline is a crucial supplier of oil to much of Europe, and an estimated 8 percent of all its daily consumption has been impacted by the disruption, according to the Financial Times. Some countries had to tap their oil reserves (and seek imports from other sources?)
The disruption will cost billions of dollars in lost revenue and cleanup. As much as five million tons of oil may have been contaminated, and the cleanup efforts – ranging from returning all the contaminated oil back to Russia to cleaning thousands of miles of pipeline – could last well into next year.
Unfortunately for some producers, the contamination occurred during seasonal maintenance. "The timing was really bad,” an industry source told Reuters. “May exports were set at the maximum capacity allowed, so producers had to use storage heavily, but still some had to cut production."
When the contamination was first detected, Russian officials suspected the damage may have been deliberate and have since investigated more than a dozen people. The bad oil appears to have originated at the Samara Transneft terminal where several small independent producers pump crude into the network. The amount of contamination suggests it was being pumped in for several days.
The contamination caused Russian oil output to fall to its lowest numbers in three years. For the first three days of June, average oil output was 10.87 MMbpd, down from an average of 11.11 MMbpd a month earlier which was below the April average of 11.23 MMbpd.
Aside from the cleanup efforts, many of the companies affected by the incident have demanded compensation. Transneft has said that its customers will be compensated but that each deal would be handled separately on a case-by-case basis. The first compensation deal was signed with Kazakhstan late last month.
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