A Ukrainian transport company reacted positively to the proposal of Slovnaft and MOL to pay transit fees for transporting oil through the southern branch of the Druzhba oil pipeline, the Slovak company said.
“Slovnaft has already made a payment to the company’s account. Based on this, Slovnaft expects the resumption of oil supplies in the coming days. The Russian side also agreed with this decision,” the company stressed.
According to Bloomberg, the Hungarian MOL also transferred the transit payment and expects to resume deliveries in the coming days.
Earlier, Transneft reported that on August 4, Ukrtransnafta stopped the transit of Russian oil through Ukraine due to a failure to pay the transit fee. It was noted that the funds sent on July 22 for transit in August were returned to the account of Transneft on July 28 in connection with the entry into force of EU Regulation 2022/1269. Through the southern branch of the Druzhba oil pipeline passing through the territory of Ukraine, oil supplies are carried out in the direction of the refineries of Hungary, Slovakia and the Czech Republic on the basis of a long-term agreement between PJSC Transneft and JSC Ukrtransnafta for the provision of oil transportation services on the terms of 100% prepayment.
The Hungarian MOL and the Slovak Slovnaft (also part of the MOL group) initiated discussions with the Ukrainian and Russian sides on the possibility of paying a transit fee to MOL or Slovnaft, which would allow oil supplies to be restored.
“The interruption of supplies occurred after technical problems at the bank level due to the payment of transit fees from the Russian side. However, production at the Bratislava refinery is running smoothly, and deliveries to the market are smooth. During this period, the Bratislava refinery is in close cooperation with the national oil transporter Transpetrol, as well as in cooperation with the Slovak Ministry of Economy, uses all the reserves available in the system for processing,” Slovnaft said.
So far, there have been no reports of a solution to the problem of transit to the Czech Republic.
Last year, 12 million tons of Russian oil was transported through Druzhba through Ukraine, including 3.4 million tons to the Czech Republic, 5.2 million tons to Slovakia, and 3.4 million tons to Hungary.
In January-June 2022, Ukraine increased the import of oil and crude oil (under economic activity code 2709) by 2.2% (by 11,116 tonnes) compared to the same period last year, to 516,807 tonnes.
According to the State Customs Service, raw materials worth $346.377 million were imported in six months, which is 1.7 times more than in January-June 2021 ($207.806 million), including from Azerbaijan – for $346.195 million, and Libya – $0.182 million.
Ukraine in January-June 2022 did not export oil, while for the same period in 2021, some 89,963 tonnes of oil were exported from the country to Romania for $27.133 million.
Oil prices could soar into the stratosphere and reach $380 per barrel in a worst-case scenario in which Russia cuts fuel supplies in response to Western sanctions, J.P. analysts predict. Morgan Chase & Co.
The Russian Federation can afford to cut production by 5 million barrels per day without causing excessive harm to the economy, Bloomberg quoted bank analysts as saying. Moscow may take such a measure due to various possible measures by the West, including imposing a ceiling on the price buyers pay for Russian oil.
At the same time, the consequences of such actions for the rest of the world will be catastrophic. A 3 million bpd production cut would push Brent oil prices up to $190 per barrel, while in a worst-case scenario, if production falls by 5 million bpd, prices will soar to $380 per barrel, experts say.
“The most obvious and likely risk associated with imposing a price cap is that Russia may decide not to participate in this scheme and instead retaliate by cutting exports,” the analysts wrote. “It is likely that the government may retaliate by cutting production to harm the West. The lack of supply in the world oil market is playing into the hands of Russia.”
September futures for Brent crude on the London ICE Futures exchange by 10:23 Moscow time are trading at around $111.8 per barrel, futures for WTI oil for August on the New York Mercantile Exchange (NYMEX) by this time are about $108.6 per barrel. barrel.
The G7 countries have committed themselves to phase out or ban the import of Russian oil, according to a statement posted on the White House website on Sunday.
“This will hit the main artery of Putin’s economy hard and deprive him of the income he needs to finance the war. The G7 also committed to working together to secure stable global energy supplies while stepping up our efforts to reduce dependence on fossil fuels.
The leadership of Ukraine will continue to seek the introduction of an oil embargo on Russia.
“Unfortunately, we have not reached the oil embargo yet. We will continue to work to convince our partners of the oil embargo,” the head of the President’s Office wrote on Tuesday in his Telegram channel.
Thus, he commented on the introduction by the European Union of the fifth package of sanctions against the Russian Federation.
Earlier, President of the European Commission Ursula von der Leyen announced proposals for new sanctions of the fifth EU package against the Russian Federation.
In January 2022, PJSC Ukrnafta increased oil and condensate production by 5.6% (by 6,900 tonnes) compared to the same period in 2021, to 130,500 tonnes, the company’s press service reported on Monday.
According to it, gas production increased by 3.6% (by 3.3 million cubic meters), to 94.5 million cubic meters.
In addition, production of liquefied gas in January 2022 at the company’s plants increased by 10% (by 990 tonnes) compared to January last year, to 10,870 tonnes.
Ukrnafta clarified that the increase in production is associated with efficient operation of the existing well stock and a reduction in equipment downtime. In addition, commissioned oil well No. 103 at the Verkhnomaslovetske field (Lviv region) had a positive effect on production activities.
“Ukrnafta is making efforts to increase hydrocarbon production, particularly of natural gas. This is an important task both in terms of supplying the domestic market with natural gas during high seasonal demand and for strengthening the country’s energy independence in the long term,” the company said.
Ukrnafta owns 85 special permits for production of hydrocarbons, and has 1,809 oil and 153 gas wells on its balance sheet. The company owns 537 filling stations.
NJSC Naftogaz Ukrainy owns 50% plus 1 share of the largest oil producing company in the country, and a group of companies associated with the former shareholders of PrivatBank owns about 42% of the shares.
