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Russian Pipeline Monopoly Warns Lithuanian Refinery of Long Shutoff

posted by zaina19 on August, 2006 as Imperialism

From: MSN NicknameEagle_wng  (Original Message)    Sent: 8/17/2006 11:02 PM

Simon Vainstock / Photo from
Simon Vainstock / Photo from
Russian Pipeline Monopoly Warns Lithuanian Refinery of Long Shutoff



The president of Russian oil pipeline monopoly Transneft Simon Vainstock said on Thursday, Aug. 17, that the branch of its Druzhba oil link that supplies crude to Lithuania’s Mazeikiu Nafta oil refinery may be shut down for years in order to conduct much-needed repairs.

“This could happen,” Vainshtok said in an interview with The Moscow Times, an English-language Russian daily, speaking of a long-term shutdown. “You understand that the lifespan of a pipeline according to industry norms is 30 years. Druzhba-1 is 42... It is made out of metals that are now forbidden,” he said.

MosNews has reported that an oil leak was reported on Druzhba-1 on July 29. Transneft cut supplies to the Lithuanian refinery at the beginning of August, while it continued to supply oil to Belarussian refineries along the pipeline. Shortly before the accident —- which took place on a branch running from the Russian city of Unecha to the Belarussian city of Polotsk —- the controversial deputy head of the Natural Resources Ministry’s environmental department Oleg Mitvol had sounded an alarm in the Russian media about the environmental risks posed by Russia’s deteriorating pipeline system.

Still, some European critics are questioning the real motives of Transneft’s shutdown to the Mazeikiu refinery. Lithuanian officials have said that the shutdown was political and even the international ratings agency Fitch has said in its recent report that if the repairs are not made within the next several weeks, the shutdown of crude supplies could be seen as a political, rather than economic move.

“If supplies of Russian crude oil by pipeline to (Mazeikiu) are not resumed within the next few weeks, this could lead one to conclude that political rather than technical reasons are to blame for the supply disruption, as the Lithuanian refinery was recently acquired by Polish PKN and not by a Russian company,” London-based Fitch Ratings said in a statement that was published on Monday, Aug. 14.

Bankrupt Russian oil company Yukos  had owned a 53.7 percent stake in Mazeikiu, which it sold to Poland’s PKN Orlen for $1.49 billion in mid-July during bankruptcy proceedings against it in a Russian court. Yukos’ court-appointed bankruptcy administrator denounced the sale, which he had attempted unsuccesfully to block. Russian state oil company Rosneft was widely thought to have wanted to acquire Mazeikiu. Russian-British TNK-BP and Russia’s largest private oil company Lukoil also took part in the tender.

The refinery “could function at full capacity without receiving crude from Druzhba,” Giedrius Karsokas, a Mazeikiu spokesman, told AFP, saying that supplies could be delivered by rail or by oil tankers via the maritime terminal of Butinge. The refinery is already receiving some supplies by rail and sea, but such options reduce the refinery’s profitability, Fitch’s statement said.

In the interview Transneft’s president Vainshtok denied that the shutoff had any political element. “We are an apolitical company,” Vainshtok told The Moscow Times. “Thank God we were able to contain the consequences of the (Druzhba-1) accident. But the oversight agencies, which are becoming stricter and stricter every year, have forbidden us to work (with the pipeline) at high pressure.”

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