Global Insight Perspective | |
Significance | A leak in the 1.2-million-b/d Druzhba oil pipeline on Saturday (29 July) was only revealed yesterday, with Russian pipeline operator Transneft playing down the impact of the incident. |
Implications | Russia's Natural Resources Ministry initially called the leak in the Bryansk section of western Russia an "environmental catastrophe", only to back off from that claim later after Transneft weighed in to say that it had already cleared up the problem. |
Outlook | While the flow of oil supplies via the Druzhba was barely affected, the incident pointed to the growing tension between Russia's oil export objectives and the country's willingness to protect its environment. |
Minimal Disruption, but What Impact?
A leak on the 1.2-million-b/d-capacity Druzhba pipeline, Russia's main oil export pipeline to central Europe, was reported yesterday, with Russia's Natural Resources Ministry revealing that an incident had occurred on Saturday (29 July) in the Bryansk region of western Russia near the border with Ukraine and Belarus. The Ministry issued a statement early in the day that "judging from information reaching the Ministry from representatives of environmental organizations...the consequences of the accident may be an environmental catastrophe in the region." The Natural Resources Ministry said at the time that it believed that at least 3,200 tonnes (23,456 barrels) of oil had spilled, affecting a 4-square-mile area and contaminating water sources.
The Ministry's dire warning, however, prompted Transneft, the Russian state-owned crude oil pipeline monopoly that operates the Druzhba, to issue its own report on the spill. Transneft said that the spill affected only a 4,000-square-foot area and that only a fraction of what the Natural Resources Ministry said had spilled had actually spilled. In fact, Transneft's Mikhail Sayapin, head of the Transneft unit that operates the pipeline, told the Associated Press (AP) that the spill had already been dealt with over the weekend and that "now there is no problem". The cause of the spill has not yet been identified.
Downstream, Slovakia's Slovnaft, Hungary's MOL, and Ceska Rafinerska, the Czech oil refiner, said that imports of Russian oil via the Druzhba were stable, confirming that the incident affected only the northern branch of the pipeline, which runs via Belarus to Lithuania. Indeed, Lithuania's Mazeikiu Nafta, operated by Poland's PKN Orlen, reported a small hiccup in oil supplies to its Mazeikiai refinery as a result of the Bryansk incident, although the disruption in volumes was minor.
Nevertheless, PKN, which took over Lithuania's sole refinery as part of its acquisition of a majority stake in Mazeikiu Nafta from Russia's Yukos, said it planned to triple oil imports by sea this month. Although PKN said that the disruption in oil supplies to Mazeikiai via the Druzhba would soon be made up, the Polish company—perhaps mindful of speculation that Russia could reduce volumes to Mazeikiu Nafta after the oil complex was sold to a non-Russian investor—is clearly looking to ensure the long-term stability of oil supplies to Mazeikiu by increasing seaborne oil shipments.
Outlook and Implications
After raising red flags initially about the spill, the Natural Resources Ministry later toned down its rhetoric on the incident, saying that it was "not disposed to call the accident…an ecological catastrophe". Nevertheless, Rinat Gizatulin, a spokesman for the Ministry, said that experts from the Ministry were headed to the site of the incident to examine the scope of its impact on the environment.
Gizatulin also pointed to the larger picture, noting that Transneft is "prone to downplay the consequences of accidents on their pipelines". The political fight over the route and the terminus of Russia's Eastern Siberia-Pacific Ocean (ESPO) pipeline is a case in point: despite vehement opposition from environmentalists, Transneft battled long and hard to stick to its preferred route via the Lake Baikal watershed before Russian President Vladimir Putin finally intervened and forced the pipeline operator to re-route the pipeline and thus minimise the risk to the lake, a UNESCO world heritage site (see 'Related Articles' below). Russian environmental groups claim that spills occur regularly along Transneft's pipeline system; AP cited Greenpeace's Vladimir Chuprov as saying that spills of 1,000 tonnes of oil occur once every year or two, with smaller spills of 100 tonnes occurring every two to three months.
The market impact of the Bryansk spill appears to be minimal, but the ecological impact of the incident is still unknown. With the 1.6-million-b/d-capacity, 4,200-km ESPO pipeline now under construction, Transneft is keen to avoid bad publicity about its environmental record, for fear that it may be forced to incorporate additional safeguards into the ESPO pipeline that could add costs or delay the timetable for bringing the pipeline into operation. That—and a somewhat secretive, Soviet-style operating mentality—may have been why Transneft was seemingly eager to keep the Bryansk spill under wraps until the pipeline operator was forced to come clean after the Natural Resources Ministry revealed the incident. Rather than seeking to keep oil spills out of the news, Transneft would be better served by improving its safety record and preventing oil spills from its pipeline system in the first place.
Related Articles
Russia: 31 July 2006: Transneft Chooses Terminus for Russia's ESPO Oil Pipeline
Russia: 1 June 2006: Oil Spill in Eastern Siberia Demonstrates Risks of Pacific Pipeline
Russia: 25 May 2006: Transneft Receives US$2.4-bil. Loan for Siberia-Pacific Oil Pipeline, Announces Re-Route Plan
Russia: 27 April 2006: Environmentalists Claim Victory as Russian President Orders New Route for Siberia-Pacific Oil Pipeline
Russia: 13 April 2006: Parliament Pushes Russia's ESPO Pipeline Ahead by Ditching Lake Baikal Protection
Russia: 7 March 2006: Energy: Russia: 'Expert' Environmental Panel Approves Planned Route for Siberia-Pacific Oil Pipeline
Russia: 7 February 2006: Russian Environmental Agency Rejects Proposed Route of Pacific Pipeline
Russia: 15 November 2005: Natural Resources Ministry Shifts, Signals Support for Siberia-Pacific Pipeline Proposal
Russia: 25 October 2005: President Orders Russian Government to Speed Plans for Siberia-Pacific Pipeline
Russia: 30 September 2005:Natural Resources Ministry Rejects Siberia-Pacific Oil Pipeline Plans on Environmental Grounds