TNK-BP resists export cuts to Poland, Belarus

MOSCOW Tue Jun 28, 2011 5:42pm BST

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MOSCOW (Reuters) - TNK-BP, Russia's No.3 oil firm, is pushing back after its temporary exclusion from the pipeline export route to Poland and cuts in crude volumes it can ship to Belarus, its chief oil trader said on Tuesday.

TNK-BP clawed back some volumes but the allocations it got for the third quarter remain below previous levels, Jonathan Kollek, senior vice president for sales, trading and logistics, told Reuters.

"After 10 years of working with one of our most profitable destinations we are thrown out. Can you say why?" Kollek said in a forthright two-hour interview at TNK-BP's new headquarters in Moscow.

The Anglo-Russian venture saw its volumes slashed in pipeline operator Transneft's second-quarter export schedule to Poland, amid a shareholder dispute over co-owner BP's bid to partner with state-controlled oil major Rosneft.

A legal challenge by the quartet of Soviet-born billionaires who own half of TNK-BP scuppered the BP-Rosneft partnership, angering the government leaders who had backed the deal.

Kollek's boss, TNK-BP shareholder German Khan, fired off a series of letters to top officials demanding explanations over why TNK-BP's allocations had been cut in the quarterly "graphic" of exports to Poland compiled by Transneft.

The company was told, Kollek said, that priority would be given to companies that sign direct contracts with end users.

Reluctantly, TNK-BP last Friday signed a term contract for the third quarter with Polish refiner PKN Orlen despite having a long-standing relationship with trading house Mercuria to cover its Polish shipments.

POLAND CUTS

TNK-BP has typically received a quarterly allocation of 1.35 million tonnes that cover its contractual commitments to supply the Polish market via Mercuria.

That was cut to 400,000 tonnes in the second quarter, all of which was lumped into April. TNK-BP received no allocations for May but managed to win some additional volumes for June after launching a letter-writing campaign, Kollek said.

For the third quarter, TNK-BP has received a Poland allocation of 980,000 tonnes, again below its typical volumes.

Kollek is lobbying to increase that to 1.5 million tonnes, or even as high as 1.8 million tonnes, so that TNK-BP can make good on its commitments to Mercuria and supply up to 300,000 tonnes direct to PKN.

"On Poland an absurd, non-transparent action forces us to be in a position where we cannot fulfil a commitment to an internationally reputable company," said Kollek, an Israeli who previously worked for trading house Marc Rich.

"We lose money. Russia loses money. We lose face."

Kollek said TNK-BP would make good on its contract with PKN even if it did not get the Q3 allocations it is seeking. If necessary, it will take the $2 per barrel hit that delivering crude by tanker into the Polish port of Gdansk would entail.

"We will perform. We will take this on, because we hope the authorities will do the right thing and give us the graphic," he said.

As the row over exports through Russia's Druzhba pipeline system rumbled, Poland increased seaborne imports, buying extra cargoes of North Sea grades, traders have said.

BELARUS SQUEEZE

TNK-BP also had its allocations to Belarus cut by over 30 percent in the third quarter, to 400,000 tonnes, even though total volumes rose by 9 percent and other oil firms received increased entitlements.

"What kind of a way is this to run a business?" he said.

"It's not efficient and it's not right to impose spontaneous, ad-hoc resolutions which upset existing long-term contractual obligations.

"This leads to inefficiencies, economic loss and last but not least to reputational issues, not only for us, for Russia as a whole."

(Writing by Douglas Busvine, editing by Anthony Barker)