Transneft: Transit of Russian oil by Druzhba pipeline via Ukraine halted on Aug 4

MOSCOW. Aug 9 (Interfax) - Transit of Russian oil through Ukrainian territory was halted on August 4, Russian pipeline operator Transneft said in a statement.

The southern branch of the Druzhba oil pipeline passing through Ukraine carries oil to European refineries in Hungary, Slovakia and the Czech Republic on the basis of a long-term agreement between Transneft and Ukrtransnafta for the provision of oil transportation services with full prepayment. Services are provided in paid volumes.

Transneft said that during a payment dated July 22, 2022 for the transit of Russian oil through the territory of Ukraine in August this year, funds were returned to Transneft's account on July 28, 2022.

"Bank GPB, which serves Transneft, informed that the payment was returned due to the entry into effect of EU Regulation 2022/1269. The procedure for controlling cross-border payments from the Russian Federation was adjusted. At the moment, European banks (correspondents) are no longer authorized to decide independently on the possibility of conducting a particular operation. It is necessary to obtain permission from the national authorized state body to confirm that the operation does not fall under prohibited ones," Transneft said.

"The situation is complicated by the fact that European regulators do not yet have a unified stance on an algorithm of actions for banks in various jurisdictions, and have not developed a procedure for issuing these permits," it said.

The Russian Energy Ministry, Ukrtransnafta and Russian shippers of crude to the Czech Republic, Hungary and Slovakia were informed about the current situation immediately.

"To resolve the issue, Transneft approached an authorized bank regarding the further transfer of information to the European regulator in order to obtain permission to conduct settlements under an agreement with JSC Ukrtransnafta. Options for the alternative passage of funds are being worked out, and daily consultations and negotiations with servicing banks are being held," Transneft said.

"Even so, the issue regarding the possibility of making payments has still not been resolved. JSC Ukrtransnafta stopped providing services for the transportation of oil through the territory of Ukraine from August 4, 2022 due to not having received funds for these services," it said.

Transit by the northern branch of Druzhba via Belarus to Poland and Germany continues as usual.