Russia’s oil crisis is far from solved
For almost four weeks, the tanker Mendeleev Prospect has been anchored idly off the Polish port of Gdansk unable to discharge a $50 million cargo of crude oil.
After any normal voyage the tanker would quickly deliver its 700,000 barrels of Russian crude into a refinery for processing into gasoline, diesel and other petroleum products. But the Mendeleev Prospect is in limbo, the victim of Russia’s unprecedented contaminated crude crisis that’s been spreading chaos though the European oil market for a month.
“There are problems,” Kremlin spokesman Dmitry Peskov said on Friday. “There are efforts being made to minimize the consequences for Russia’s partners and counterparties, as well as for all related Russian systems.”
In April, unusually high levels of the chemicals known as organic chlorides were discovered in Russian crude flowing through the giant Druzhba pipeline, built in the 1960s to carry crude from the U.S.S.R. to allied countries in Eastern Europe. The chlorides can severely damage oil refineries, and on April 24, Russia’s state pipeline operator, Transneft PJSC, halted shipments. Moscow pledged to resolve the issue right away; four weeks later, the flow of Russian oil into Europe is little more than a trickle.
The length and scope of the crisis has given it a political dimension. On Thursday, Polish Prime Minister Mateusz Morawiecki decided to get personally involved in finding a solution, but said talks were “very difficult, very tough.”
Despite pledges from Russian authorities to resume shipments in days, the crisis is proving bigger, longer and costlier than almost anyone expected and a solution could still be weeks away.
In Germany, one of the continent’s biggest refineries — the Leuna plant owned by French oil giant Total SA — has shut down. Poland has had to tap the emergency petroleum reserves. And as far west as Rotterdam, Europe’s petroleum hub, some refineries have been forced to run at lower rates.
The technical challenge of handling millions of barrels of tainted crude has been compounded by fights over who will pay the cost of the crisis. An emergency summit in Warsaw on Thursday made some progress, but didn’t nail down a solution.