The price of "Friendship" is measured in billions

Oil workers pay European consumers for pollution in the pipeline.
09.10.2019
Kommersant
Origin source
Foreign consumers, to whom oil contaminated with organochlorine reached in the spring from Russia, began to receive compensation for force majeure on the Druzhba pipeline. So, the Polish PKN Orlen received a part of the payment for short supply of oil. According to Kommersant, the Hungarian MOL may soon receive the money. But the oil industry will most likely receive the bulk of the requirements by the end of the year, when consumers finish their calculations and then Transneft re-puts them. Voluntarily, the monopoly can pay a maximum of 43 billion rubles, based on an estimate of the volume of contaminated oil at 5 million tons. Compensations in excess of this amount will have to be sought in court.

The Polish concern PKN Orlen received part of the compensation for oil shortages due to contamination of raw materials in the Druzhba pipeline (owned by Transneft) with organochlorine compounds at the end of April. RIA Novosti was informed about this by the company’s press secretary, Ioanna Zakrevskaya, without mentioning the amount or organization from which the money came. The concern also expects compensation for the processing of contaminated raw materials. Orlen is going to provide the full amount to the Russian side before the end of the year, now it analyzes the costs incurred. In the same schedule, Belarus plans to complete the loss calculation.

Sources of Kommersant say that the volume of contaminated raw materials entering the country has not yet been finalized with Poland. So, Transneft estimated it at 400-600 thousand tons, and Warsaw - more than 1 million tons.
In mid-September, the Polish operator of the Druzhba oil pipeline PERN reported that about 450 thousand tons of contaminated oil remained in its storage facilities.

According to Kommersant’s interlocutors, last week LUKOIL held talks with the Hungarian MOL and could agree on the amount of compensation. Also agreed payment parameters for Kazakhstan based on compensation volumes of about 600 thousand tons. In general, Belarus estimated the volume of contaminated oil at 5 million tons.

The companies did not respond to Kommersant's requests; Transneft did not comment on the situation. A Kommersant source close to the government explains that now oil companies that had contracts for the supply of raw materials to refineries will pay compensation to foreign consumers of Russian oil, and then Transneft will reassign them as a guarantor of the quality of oil delivery.
According to the interlocutor of Kommersant, the oil industry will not have problems with the payment of compensation, as companies have reserved funds for this case.

At the same time, he is confident that consumers will try to get as much as possible from suppliers, including for indirect damage. For example, in June, Deputy Prime Minister of Belarus Igor Lyashenko stated that oil contaminated with caustic dichloroethane irreparably spoiled $ 20 million worth of equipment at the Mozyr Oil Refinery, while Kommersant’s interlocutor on the market insisted that part of the plant had been planned for a long time equipment and it was pre-ordered. Also, according to the interlocutor of Kommersant, Germany is demanding compensation, although Transneft is confident that the contaminated oil did not manage to reach the country.

Suppliers, according to Kommersant’s sources, in turn, will try to present Transneft with even higher demands than they themselves received from consumers, for example, for lost profits or damage to their reputation. So far, no demands have been made by the monopoly, Kommersant’s interlocutors assure. They note that Transneft is going to firmly uphold the limit on payments to shippers approved by the board of directors at the rate of $ 15 per barrel of substandard oil. Companies will have to figure it out on their own, as the government is not going to intervene. This position was confirmed by Kommersant in the office of Deputy Prime Minister Dmitry Kozak. A Kommersant source is confident that litigation to resolve disagreements on the level of payments cannot be avoided.

Sergei Garamita from Raiffeisenbank believes that Transneft will pay oil compensation to the oil companies without a court if they present documents on the expenses incurred, but companies that will be above this level will have to defend in court. Andrei Sharkov, Managing Partner of Steps Law Firm, adds that the condition of the applicable law and the specific court or arbitration institution that will be authorized to consider such a dispute is usually written in contracts between the consumer and the supplier.

Mr. Garamita calculated that even with a maximum estimate of 5 million tons of contaminated oil (36.6 million barrels) with an approved level of compensation of $ 15 per barrel and taking into account additional costs of $ 3 per barrel, Transneft will pay no more than 43 billion rubles. This, in his opinion, will not be a blow to the company, but will reduce the dividend base for 2019.

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