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Poor Russian crude quality leads Belarus to cut oil-product exports

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Poor Russian crude quality leads Belarus to cut oil-product exports

Moscow — Belarus is limiting oil-product exports as a result of a deterioration in the quality of crude supplied from Russia, state news agency Belta reported Monday.

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"Taking into account the sowing season, and the risks of refining poor quality feedstock we took the decision to temporarily limit exports of oil products," Belneftekhim deputy chairman Vladimir Sizov said, according to the report.

"As the situation improves, obligations to our customers will be met," Sizov said.

Belarus exports gasoline, diesel, fuel oil, and VGO through the Baltic port and also by land to Ukraine and other nearby countries.

Earlier the Russian energy ministry said that problems with the deteriorating quality of crude exported to the West were technical and would be resolved in the near future.

The ministry denied that the problem was linked to economic disputes, which have increased between the two countries recently. Negotiations between the two sides are expected to take place Tuesday, including on possible compensation.

In mid-April, Belarus threatened to suspend Russian crude transit to Europe over ongoing economic disputes. Belarusian officials suggested part of the Druzhba pipeline, which delivers more than 1 million b/d of crude to Europe via Belarus, may be closed for maintenance. If the pipeline were closed, Russia would be able to redirect some of the crude volumes via its ports on the Black and Baltic seas, but would not be able to compensate for the full halt.

Outstanding issues between the two countries include natural gas prices, as well as compensation for refineries that face higher crude prices as a result of changes to taxation.

The energy ministry said that the current quality issues are linked to excess organic chlorides in oil shipped to the West. This was discovered by state-owned pipeline operator Transneft, which had taken measures to bring levels back to normal, including localizing the source of this higher concentration, and redirecting flows.

"There is constructive dialog with our Belarusian partners to minimize the consequences for refineries in Belarus, including using an alternative supply route to the Mozyr and Novopolotsky refineries," the energy ministry said, adding that exports are being carried out as planned and the situation is expected to normalize in the near future.

Local media reported that Mozyr is already experiencing problems due to the poor quality crude, with heat exchange tubes at the plant suffering corrosion, the Belapan news agency reported. The refinery has increased the use of reagents to protect the equipment. Citing Belneftekhim, the report stated that a lot of low-quality crude remains in the pipeline network, and they do not expect good quality crude to flow earlier than in eight to 10 days' time.

Belta also reported that Belarus has asked Transneft to increase supplies along the Northern branch of Druzhba due to the poor quality of deliveries via the Southern route. Citing Naftan CEO Alexander Demidov, the report said that to protect equipment, the plant's load has been reduced by 40%.

-- Rosemary Griffin, rosemary.griffin@spglobal.com

-- Edited by Jonathan Dart, newsdesk@spglobal.com