July 17, 2019 / 12:40 PM / 3 months ago

Russia's Transneft signed off on alleged supplier of tainted oil: documents

* Russian firms trading blame over origin of contamination

* Local firm accused of pumping pollutants into pipeline

* Transneft certified oil supplies - documents

* Transneft declines to comment

By Dmitry Zhdannikov, Olga Yagova and Vladimir Soldatkin

LONDON/MOSCOW, July 17 (Reuters) - A small oil transport firm accused of pumping toxic chemicals into Russia’s crude pipeline network that then polluted oil exports to Europe received daily documents from Russian state pipeline monopoly Transneft giving its oil deliveries a clean bill of health.

The documents seen by Reuters certified the oil deliveries from March 30 to April 19, the period when the worst contamination of Russian oil in decades was taking place, at the place prosecutors said was the source of the contamination.

Russian prosecutors have detained two executives with the small oil transport firm, which is called Nefteperevalka. Prosecutors identified them as Nefteperevalka General Director Svetlana Balabai and her deputy, Rustam Khusnutdinov.

Transneft declined to comment.

Prosecutors have said they have detained two other suspects, Sergei Balandin, deputy general director of a firm called Magistral, and Vladimir Zhogolev, general director of a firm called Petroneft Aktiv.

Russian prosecutors have charged a further two people, who are being sought by police: Roman Trushev and Roman Ruzhechko, according to a copy of the charges against them seen by Reuters. Trushev is a former Nefteperevalka owner and Ruzhechko is general director of a company called Samartransneft-Terminal that used to own Nefteperevalka.

Prosecutors alleged the six took part in a criminal conspiracy to pollute the oil network, which is owned and operated by Transneft. Prosecutors alleged Trushev and Ruzhechko directed the conspiracy, and recruited the other four suspects to take part in it.

Prosecutors did not say on what basis they made that conclusion. A lawyer for Balabai said she was not guilty of the charges. Trushev’s lawyer said Trushev was not guilty. A lawyer for Khusnutdinov and a lawyer for Zhogolev declined to comment. Reuters was unable to reach Balandin or his representatives. A lawyer for Ruzhechko said there was nothing in the prosecutors’ files that proved his client’s guilt.

Transneft boss Nikolai Tokarev has said the contamination was the fault of the firm that supplied the oil, though he did not identify the company by name.

Asked about the documents, Russia’s Investigative Committee, the state body that investigates major crimes, did not respond to a request for comment. Phone calls to Nefteperevalka headquarters went unanswered. A number listed for Petroneft Aktiv was out of service. Reuters was unable to find contact details for Magistral.

Russian President Vladimir Putin said the incident hurt Russia’s reputation as a reliable supplier. The question of who is to blame for the incident is closely watched by Russian oil buyers.

Oil majors such as France’s Total have said they have suffered losses amounting to tens of millions of dollars from contaminated oil and will seek compensation. Transneft has said it will consider paying compensation but has yet to reach agreements with buyers.

The documents seen by Reuters certify that oil delivered into the pipeline network by Nefteperevalka at an intake terminal it owns in the central Russian Samara region met technical standards set by the Russian state.

Reuters was not able to independently verify the authenticity of the documents.

The certificates appear to be signed by officials of Transneft subsidiary Transneft-Druzhba. Each certificate bore the signatures of two Transneft officials, but the officials changed from day to day. The certificates were issued at least once a day, or in most cases more often, over the period when the contamination entered the pipeline network. There was no response to Reuters requests to the officials for comment, sent via Transneft-Druzhba.

The documents stated that the crude delivered to the Transneft pipeline network by Nefteperevalka was in line with all technical criteria, including a threshold for the presence of organic chlorides - the class of chemical responsible for the contamination.

TRANSNEFT RESPONSIBILITY

The toxic chemicals polluted the Druzhba pipeline, one of the main trunk routes along which Russia, the world’s second largest oil exporter, sends crude to customers in countries including Germany, Poland and Hungary.

European refiners had to halt work for fear the contaminated crude would damage their equipment. The disruption sent oil to a six-month high above $75 a barrel.

At an April 30 meeting with Putin, Transneft boss Tokarev said the contamination was the fault of an unnamed local oil company that supplied poor-quality oil as part of a criminal scheme.

The firm to blame for the contamination “takes care of the quality of this oil, the certification of that quality, and then transmitting it into the trunk pipeline network”, Tokarev was quoted as telling Putin in a transcript released by the Kremlin.

The alarm was first raised about the contamination on April 19 after the tainted oil reached Russia’s western neighbour Belarus. The oil would have taken around eight days to travel the roughly 1,000 km from the Samara region, based on the average speed at which oil flows through the pipeline.

Reuters was unable to determine whether the documents seen by Reuters covered all the oil delivered into the pipeline network by Nefteperevalka at the terminal, and whether there were volumes of oil that had not been subject to testing.

One of three certificates for April 20 stated that the level of organic chlorides in oil delivered by Nefteperevalka was more than 10 parts per million, above the maximum permissible level under state-mandated standards of below 10 ppm.

Nefteperevalka can process 2,800 tonnes a day. Belarus said some 5 million tonnes of oil were contaminated with organic chloride whose levels exceeded 100 ppm and were sometimes as high as 300 ppm.

Transneft issued its first statement about the contamination on April 26, seven days after the crisis erupted. (Additional reporting by Maxim Nazarov in MOSCOW; Writing by Christian Lowe; Editing by Jane Merriman and Dale Hudson)

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