May 20, 2019, 14:54 / Business

Total and Eni suspended payments for oil supplies via the Druzhba pipeline

Total and Eni suspended payments to Russian companies for supplies of contaminated oil via the Druzhba pipeline in April, Reuters writes , citing sources. The French and Italian companies will not pay until they reach agreements with the Russian side on compensation, the sources said.

, about this Total and Eni have already notified Russian suppliers, including Rosneft and Surgutneftegaz , the sources added. Payments will be resumed only after the damage has been determined and clean oil supplies have been resumed, the agency notes. “Why would anyone pay for this oil? Strictly speaking, this is not oil, and no one in Russia can clearly explain who will give compensation to whom,” one of the sources said. Total, Eni, Rosneft and Surgutneftegaz did not respond to Reuters requests for comment.

As Reuters notes, payment for the delivery of millions of barrels of contaminated oil was due on May 15. Western buyers have the right to refuse to pay for oil they buy without knowing it is contaminated, as every oil sales contract comes with a document stating that the oil supplied meets international quality standards, the agency explains. But sales of oil supplied through the Druzhba pipeline are regulated by Russian law, according to which payment must be made. If the quality of the oil is not good enough, then payment should be accompanied by a claim for damages, notes Reuters. “Our position is clear. Western companies must pay and then file a claim for damages, which we can cover later,” said a source at a major Russian oil company.

Previously, Belarus came to the conclusion that the country received 9 million barrels of contaminated oil through the Druzhba pipeline, the cost of which at current prices is estimated at $500 million. “This (supplies of contaminated oil - Vedomosti) is probably the biggest violation of oil supplies in the past the entire history of Russia. Oil continued to be supplied via Druzhba during the Prague Spring of 1969 and in 1991, when the Soviet Union collapsed,” one of the sources recalled. The only significant disruption to oil exports via the Druzhba pipeline was a three-day suspension of supplies due to price disputes with Belarus at the end of the last decade, Reuters recalls.

At the end of April, the Belarusian company Belneftekhim announced the supply of contaminated oil from Russia via the Druzhba pipeline. A high content of organic chlorides was found in the raw materials. Due to these impurities, the work of the Mozyr Oil Refinery was suspended for some time. In turn, the Russian Transneft explained the supply of contaminated oil as fraud. A criminal case was opened into the incident. The court arrested four defendants in the case, two suspects were put on the wanted list.

Previously on the topic: Belarus has stopped the transit of Russian oil to Ukraine