Uncertainty remains with crude oil deliveries

  • 2007-04-18
  • By TBT staff

REPAIRED: Despite Russia's flip-flopping, PKN Orlen is happy that it has completed most of the repairs after last October's fire at the refinery.

VILNIUS - Conflicting reports emerged over the past fortnight as to whether Russia would repair the damaged section of pipe and renew crude oil deliveries to Lithuania, which is being forced to pay more for crude to keep its refinery in Mazeikiai running. On April 10 RIA Novosti reported that Rostekhnadzor, Russia's chief technology inspector, had ordered Transneft, Russia's oil pipeline monopoly, to repair the damaged spurs of the Druzhba oil pipeline within two weeks.

The spurs, which are located in Belarus, were shut down last July after damage occurred and oil began leaking. At the time Moscow officials said it would take months to repair the damage, and later Transneft's chief, Semyon Vainshtok, said the pipe was 42 years-old and not worth fixing at all.
Lithuanians and Poles, who were not allowed to inspect the damage, claimed Moscow was punishing them for not selling the Mazeikiu Nafta refinery to a Russian oil company, which the Kremlin had lobbied for.
Most recently, European Commission President Jose Manuel Barroso said he would take up the issue with Russian President Vladimir Putin during the two men's meeting later this month in Russia.

Indeed, the decree by Rostekhnadzor could be seen as Russia's posturing on the eve of the meeting.
Last week a Lithuanian newspaper and news portal reported that Moscow had no intention of renewing oil deliveries to Lithuania by land and that instead it wanted to boost throughput at its own terminals, primarily Primorsk in the Gulf of Finland.
The Lietuvos Zinios wrote that Russia would reroute oil exports to Primorsk in order to bypass Belarus and Poland and that the Industry Ministry has confirmed that it has worked out a project for a new oil pipeline called BTS-2.
The pipeline would run from the Russian town of Unecha near the Belarusian border to Primorsk, from where it would be exported to Western Europe by tankers, the paper reported. The new pipeline would have an annual capacity of 80 million cubic meters.

The Alfa.lt website reported that the project has received the green light from the Ministry of Fuel and Energy and is now awaiting a decision from the government. The pipeline could be built in 18 months.
Still, a group of Russian MPs visiting Vilnius this week said that oil would soon begin flowing back to the Baltic state.
Parliamentary Speaker Viktoras Muntianas said he was promised this by the Russian parliamentary delegation, which included a member of the energy committee, Viktor Opekunov.
Muntianas said he was promised that the problem would be tackled.
"We talked about this issue as well 's about resuming the supply via the pipeline, and there were promises that the problem would be addressed," he said.

Opekunov stressed that the supply of oil by the pipeline had been ceased for technical failures, and he would not estimate when it could resume.
He denied the media's statements that the Druzhba pipeline would be closed in favor of a sea route through the port of Primorsk near St. Petersburg for oil exports.
Mazeikiu Nafta is Lithuania's largest enterprise. It is 90 percent owned by Poland's PKN Orlen, which bought the refinery and terminal complex for over $2.3 billion last year.

Despite the crude cutoff in July and a fire in October, PKN Orlen is still sanguine about the refinery's prospects. The company announced at the end of March that the second stage of damage-repair has been completed and that the refinery can now produce more light and medium products.