Compensation for Russian dirty oil to be decided by buyers and sellers

[MOSCOW] Compensation for the contamination of Russian oil in the Druzhba pipeline should be agreed between the buyers and sellers of this oil, Russia's Deputy Energy Minister Pavel Sorokin told reporters on Monday.

Russian officials and oil suppliers met European buyers in Moscow on Monday to discuss the incident, in which several million tonnes of oil were found contaminated with high levels of organic chloride. That has disrupted deliveries to Belarus, Germany, Poland, Ukraine and other countries since April.

"It is up to the receiver and shipper of the cargo to agree on a reasonable sum," Sorokin said.

Poland's biggest refiner PKN Orlen said in a statement that after the meeting in Moscow it had been told that Transneft, the operator of the Druzhba pipeline, would provide compensation for oil producers to meet their customers' financial claims related to the contaminated oil.

One participant at the meeting, who asked not to be named, told Reuters that "Transneft said that it is ready to consider.... claims for dirty oil." Another participant confirmed the statement by Transneft at the meeting.

Transneft did not respond to a request for comment.

The company's vice-president, Sergei Andronov, told reporters after the meeting that clean Russian oil was expected to reach Poland on June 9-10.

As of last week, state-run Transneft and some government officials were at odds over who should pay to clean up the contamination. First Deputy Prime Minister Anton Siluanov said on Wednesday that Transneft should not expect Moscow to pick up the tab, while Transneft said the blame for the contamination rests with producers.

Transneft also had made it clear last week saying that it would only compensate Russian producers and fellow pipeline companies while Western buyers should seek compensation from Russian suppliers.

REUTERS