The Russian Energy Ministry has approved a plan to deal with the hundreds of thousands of tons of chlorine-contaminated oil which European buyers refused to accept and which the Russian oil transit monopoly Transneft was forced to pump back to Russia.
Citing sources in the oil sector, Reuters reported that next week Transneft will begin mixing dirty oil with clean oil and even sending it to Russian oil refineries.
The processing of the oil mixed with organochlorides will be entrusted to refineries in central Russia, including the Moscow refinery, Kinef and Norsi, Reuters’ sources claim.
The heightened concentration of chlorine will persist at least until the middle of 2020, and could last until 2021. Part of the oil will be sent for export through the ports of Primorsk, Novorossiysk and Ust-Luga.
After the mixing, although the chlorine content will remain within the parameters stipulated by GOST and the Eurasian Economic Union (no more than 6 parts per million), it will still be several times higher than European standards (no more than 1 ppm). At Primorsk and Novorossiysk it will be 5 ppm, and 3.5 ppm at Ust-Luga.
Oil companies have been displeased by Transneft’s proposed scheme: the contaminated oil will have to be sold at a considerable discount, and the refineries will require additional technologies to avoid the risk of corrosion and damage to equipment.
The countries are now trying to think of alternative solutions to the one proposed by the Energy Ministry.
“Mixing clean and dirty barrels is a bad idea, a useless waste of a product,” complained one of Reuters’ sources.
“This oil could be sold at a discount. A lot of interested parties could be found. This kind of oil can be heated, it can also be churned, but there needs to be a discount,” another suggested.
Despite the objections, the scheme to clean out the pipes has already been approved by Transneft and the Russian government, a third source explains: the organochloride content is within the parameters set by the Eurasian Economic Union, and so the transport monopoly’s plans are unlikely to change.
The price of Russian Urals oil has already dropped on account of the chlorine content: whereas at the start of May it was 70-80 cents more expensive than Brent, by the end of June it was trading at a discount of $2-2.2.
Some batches have even had to be sold at a discount of $7-10 per barrel, an oil trader familiar with the situation told Reuters.