Belarus Demands $155 Million For Damage Caused By Poor Russian Oil

The Mozyr oil refinery has estimated claims to be $155 million against Rosneft’s for contaminated oil and damage, the Russian Kommersant reports.

The said amount was outlined in the letter by Igor Sechin, the head of Rosneft, to Deputy Prime Minister Dmitry Kozak.

Sechin asks to speed up decision-making on compensation for losses from “dirty” oil that ran through the Druzhba pipeline. The preliminary amount of compensation proposed is $155 million.

belarus russia poor oil contaminated compensation

The numbers are explained by the fact that out of 443,000 tons of oil worth $185 million provided by Russia in April, 370,000 tons were polluted. The Belarusian side estimated its cost to be zero.

The refinery asks Rosneft to voluntarily return an overpayment of $155 million. It expresses its willingness to sue in the Moscow Arbitration Court, but advocates resolving the issue “with long-term business partners out of court”.

The Belarusian side also expresses its readiness to consider a commensurate reduction in the price of low-quality oil. Meanwhile, the experts of the edition say that “there is basically no damage done by the polluted oil supplied to Mozyr.”

“The thing is that, according to the Moscow and Minsk agreement, all contaminated oil from the territory of Belarus will be returned to Russia.

In exchange, as Deputy Head of the Ministry of Energy Pavel Sorokin confirmed in an interview with Reuters on  10 June, pure oil will be delivered to Belarus.”

These claims were redirected to Transneft, however, as Igor Sechin noted, the company has not confirmed its commitment to satisfy them.

At the same time, foreign consumers are already seeking alternative supplies and recruiting lawyers to file legal claims against Rosneft.

Bad oil timeline

On 19 April, Belarus state oil company Belneftekhim announced a “sharp deterioration” of the quality of the Russian oil transiting through the Druzhba pipeline. The Russian pipeline monopoly acknowledged the problems.

On 22 April, the Mozyr refinery declared that poor-quality Russian oil led to the failure of expensive equipment. Back then, according to preliminary estimates, it was about $30 million.

On 23 April, Belarus suspended the export of light oil products to Ukraine, Poland, and the Baltic countries. Belneftekhim stated that the polluted product had reached Europe and Ukraine.

On 24 April, the Belarusian refinery Naftan reported the renewal of quality oil pumping along the northern branch of the pipeline. At the Mozyr refinery, the situation remained unchanged.

Poland halted imports of Russian oil on 25 April, Ukraine – on 26 April. Russia promised to transit oil of good quality to Belarus at the beginning of May. A criminal case was started in Russia.

On 15 May, Russia’s Energy Minister Alexander Novak stated that the total damage from the dirty oil could amount to no more than $100 million.

On 7 June, during his visit to Naftan, Alexander Lukashenko noted that a number of international companies demand up to $800 million in damages from Russia.

“We have suffered the worst. But they say that Belarusians have incurred almost no losses. How come? We need to keep an eye on what is going.

Why they are paying $800 million in damages, while we, who got hit the worst, are getting only about $20 million. We need to follow this situation closely,” said Lukashenko.

The amount of compensation for damages caused by “dirty” oil has been discussed between Russia and Belarus for almost a month. However, the specific amount has not yet been announced.