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Druzhba Pipeline: Oil deliveries from Russia to Central Europe stopped

2022-08-09T16:56:27.638Z

Hungary, the Czech Republic and Slovakia no longer receive oil from Russia. The Russian operator apparently cannot afford the transit fees because of the sanctions.



Enlarge image

"Friendship - Druzhba"

: Deliveries through the southern part of the oil pipeline have been stopped

Photo: Patrick Pleul / dpa

Europe's energy security has suffered another setback: Russian crude oil supplies to Hungary, the Czech Republic and Slovakia via Ukraine have been halted since August 4 because Russian pipeline operator Transneft PJSC was unable to pay transit fees due to sanctions , reports the financial news service Bloomberg on Tuesday, citing Transneft.

Russia is already blaming international sanctions for curtailed natural gas supplies to Europe through the Nord Stream pipeline.

The northern section of the Druzhba pipeline, which runs through Belarus to Poland and Germany, is not affected, but the southern section of the connection has been shut down since August 4th.

The markets reacted promptly on Tuesday: the price for a barrel of North Sea Brent rose to $98 per barrel (Brent) - an increase of around 1.5 percent.

According to the report, Ukrtransnafta, the operator of the pipeline network in Ukraine, stopped deliveries on August 4.

According to the contracts between Transneft and Ukrtransnafta, the transit fees for the oil quantities must be paid in advance.

Although Transneft made the advance payment to Ukrtransnafta on July 22, the money was returned on July 28 because the payment had not gone through due to the sanctions, reports Bloomberg, citing Transneft.

According to Gazprombank, which processed the payment, the money was returned because of EU restrictions.

The European banks involved in the transaction are not allowed to make their own decisions about cross-border payments from Russia due to the sanctions - they need the approval of their national regulators.

Hungary is particularly affected

Russia normally supplies about 250,000 barrels per day to Hungary, Slovakia and the Czech Republic via the southern branch of the Druzhba pipeline.

Hungary's oil supply is now considered particularly at risk.

According to the report, the Budapest-based refiner Mol stated that it would like to pay the transit fee to Ukraine itself if necessary in order to get the crude oil transport through the pipeline going again as quickly as possible.

In the best-case scenario, the financial dispute will be settled within a few days, says Tamas Pletser, an analyst at Erste Bank.

If the standstill lasts longer, the refinery operator Mol has fuel reserves for a few weeks.

But after that, the country would have to fall back on its strategic oil reserves.

For Hungarian President

Viktor Orban

(59), the supply interruption comes at an unfavorable time.

After all, some oil companies have already curbed or stopped their imports to avoid losses because of the fuel price cap he imposed.

rei

Source: spiegel

All news articles on 2022-08-09

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