Transneft Extends Oil Transit Deal with Ukraine's Ukrtransnafta

(P&GJ) — Ukrainian pipeline operator Ukrtransnafta said it has agreed to a 10-year oil transit extension with Russia’s Transneft. 

Signing of the extension Tuesday in Zagreb (photo: Ukrtransnafta)

The agreement extends the current contract between the two companies to Jan. 1, 2030, according to Ukrtransnafta (Naftogaz of Ukraine). The deal was signed Tuesday during the international "Energy in the 21st Century" conference in Zagreb, Croatia, by Ukrtransnafta CEO Mykola Gavrilenko and Transneft Vice President Sergey Andronov.

The final agreement and signing of the document followed a November 27 Ukrtransnafta shareholder decision. It states that the basic principles of cooperation between Ukrtransnafta Transneft will continue without changes, such as the order of payment of services and interaction mechanism at the level of technical services, Ukrtransnafta said. 

"The additional agreement ensures the safe and constant work of the transport system of Ukraine on a long-term basis," it said.

The Nov. 26 decision to extend the agreement came "after the test of high-quality indicators" in the system, which receives supply via the 1 million-bpd Druzhba Pipeline.

Contamined oil was discovered in the Druzhba system in April, leading to a temporary stoppage of Russian oil exports  and a reduction in oil production in Russia. 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. 

In July, Transneft announced a cap of $15 per barrel for compensation for damages stemming from contamination in its network.

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