Glencore, BP stuck with tainted Russian crude

MOSCOW (Reuters) – BP and Glencore are struggling to sell around 600,000 tonnes (( little over 4 million barrels) of tainted Russian oil more than three months after the contamination was discovered, according to six trading sources. Russia’s oil industry was plunged into a crisis in April after about 5 million tonnes of oil ( a little over 35 million barrels) for export was found to be contaminated with organic chloride, a chemical used to help boost oil extraction but which can damage refining equipment. Exports through the Druzhba pipeline that transports oil to Germany, Poland, Hungary, Slovakia, the Czech Republic, Ukraine and Belarus were halted. The Baltic port of Ust Luga loaded some 15 cargoes or 1.5 million tonnes of the contaminated oil for Western buyers. At least 6 cargoes that sailed from Ust Luga remain unsold, according the trading sources. Glencore is stuck with 500,000 tonnes in one very large crude carrier (VLCC) Amyntas and two smaller tankers – Searanger and Searuby, according to the sources and Refinitiv Eikon vessel tracking system. BP has tried to sell its cargo Fsl Shanghai at a tender earlier this month but failed, according to the same traders. BP and Glencore both bought the oil from Russian state oil major Rosneft. BP and Glencore declined to comment. Rosneft did not respond to a Reuters request to comment. Oil firms have to blend one barrel of tainted oil with as much as 10 barrels of clean oil to reach required quality standards and avoid damaging equipment, sources said. Total, for example, offloaded its two tankers with dirty oil in Rotterdam and Lithuania for storage and blending and further refining. Russian oil supplies along the Druzhba pipeline to Germany, Poland, Hungary, Slovakia and the Czech Republic have resumed in July after weeks of severely reduced flows. Russia exported 24% less oil to Germany in the first six months of 2019, year-on-year, due to contamination although it still remained Germany’s top crude supplier. Some refiners like Total’s Leuna and Poland’s PKN Plock are blending tainted oil with cleaner barrels and are refining it. Rosneft’s Germany’s refinery Schwedt has refused to take dirty oil, according to traders. Rosneft declined to comment. Belarus has finished full clean-up of its system after Transneft pumped some 2 million tonnes of dirty oil back to Russia, Transneft and traders said. Transneft now needs to dilute the oil with cleaner supplies to domestic refineries and export destinations. The pipeline monopoly has also yet to sign final compensation documents with Kazakh producers to start repaying fees of $15 per barrel, traders said.