LONDON / MOSCOW (Reuters) – Russian oil producer Lukoil and Hungarian energy company MOL are expected to sign an agreement on contaminated oil during Russian President Putin's visit to Budapest this week, four industry sources told Reuters.
File Photo: Logo of the Hungarian oil and gas group MOL at the company refinery in Szazhalombatta, Hungary March 22,2016 REUTERS / Laszlo Balogh / Stock Photo
A high level of organic chloride was found in late April at Russia's Druzhba pipeline, which connects the Siberia oil fields to Belarus, Ukraine, Poland, Germany, the Czech Republic and Hungary. The substance, which can damage refining equipment, was also detected at the Baltic Sea port of Ust-Luga.
The contamination disrupted Russian oil exports to the West and led to protracted compensation negotiations.
A source familiar with Lukoil and MOL's plans said companies are unlikely to disclose the amount of compensation to be received by MOL.
"We are cooperating very closely, so it is just an official statement about successful agreements and prospects for future cooperation," the source said.
The deal should be signed during Putin's visit to Budapest. Last week, his aide, Yury Ushakov, said Putin would travel to Hungary on October 30.
Last month, Russia and Kazakhstan reached a preliminary agreement on compensation for contaminated oil, although the final agreement has not yet been signed.
Lukoil, MOL and Russian monopoly of Transneft pipelines (TRNF_p.MM) did not respond to requests for comments.
Up to five million tons of crude oil may have been contaminated by organic chloride used for oil extraction.
Traders like Glencore and BP have struggled to sell contaminated oil, which can potentially be mixed with unaffected crude to become usable.
Transneft said the compensation will not exceed $ 15 per barrel.
Reporting by Olga Yagova and Dmitry Zhadnnikov; Written by Vladimir Soldatkin; Editing by Mark Potter
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