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Druzhba Pipeline Accident: Key Implications

Druzhba Pipeline Accident: Key Implications

The Druzhba oil pipeline accident became the main “hit” in the Russian oil industry in 2019.

A year has passed, but no satisfactory answer about what did in fact happen has been given to date. Meanwhile, it was Russia’s reputation as a reliable oil supplier that was put in jeopardy.

Oil with organic chlorides got to Belarus, Hungary, Poland, Germany, Ukraine, other countries. The accident led to a tremendous international scandal. That – at a moment when increase in competition on the global oil market became obvious.

And the internal showdown over the affair continued for a year and indeed, it is not over yet. The bureaucratic conflicts may be considered to have begun with the personal meeting of Vladimir Putin and the Transneft chief executive, Nikolay Tokarev, in late April 2019. One might also say that the symbolic end to them was brought by their new meeting in exactly one year, in May 2020. But this end will be highly conditional.

The case will have a lingering aftermath, evidence whereof is given, for instance, by current disputes over prices for oil transport.

It is therefore a delusion to think that the accident has been forgotten and that it has sort of “dissolved”. Officially, though, not even those to blame have been clearly identified.

The NESF's new report examines this unique accident in detail and discusses the key implications of the affair. You will find in it the following subjects:

  • A chronicle of one war

    • How the accident caused a tremendous corporate war between Rosneft and Transneft
    • The strategies and tactics of the opponents, their actual objectives and key instruments

  • The dispute over prices as a new stage of the conflict

  • What action regulators took

    • The accident as a test for the oil and gas sector management system
    • Key victims in the elite
    • The positions of the government agencies concerned

  • Reform of the system of oil quality assurance and oil transport control

    • Key proposals and bureaucratic battles
    • The interim result of the disputes

  • Settlement with foreign buyers

    • Talks with Belarus, Poland, Ukraine, Kazakhstan, Hungary, and the other countries involved
    • Reasons why the dispute was protracted
    • The mistakes of the Russian side at the initial stage
    • Analysis of the arrangements made

  • The positions of Russian integrated oil companies and their negotiations with Transnef

  • The main domestic and foreign implications of the accident

Contents of the report:

Introduction 3
Beginning of the scandal. A chronology of the Druzhba. Accident and the first consequences 5
Official investigation into the causes of the accident 11
War between Rosneft and Transneft 15
Settlement of compensation disputes with other countries 24
Belarus 27
Poland 31
Other countries 35
Settlement with other Russian integrated oil companies 37
Discussion of reform of the system of oil quality assurance and oil transport control 41
New round of the fight between Rosneft and Transneft: a dispute on prices 48
Conclusion 54
Date of release: August 24, 2020

If you are interested to obtain please contact » Elena Kim

Other issues:
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After February 2022 the agenda was radically rewritten. Western companies began leaving Russia en masse, economic relations with the West were drastically reduced, and the Russian economy began to be pushed violently from the global economic space, hemmed in by sweeping sanctions. All that was, to put it mildly, not the best background for talking about ESG. Especially because tasks of survival and stability under unprecedented pressure became the priority in the economy. In late 2022, however, attempts to reanimate the ESG agenda already became obvious. The message is put across insistently that it is important to Russia regardless of the foreign policy situation. While earlier the “green pivot” was seen as an opportunity to attract Western investors and their technological solutions to Russia, now Keynesian reliance on domestic manufacture is discussed.
Oil and Gas Sector Regulation in 2022 and Prospects for 2023
Gazprom at the Forefront of Economic and Political Battles with Europe
Gazprom is being actively thrown out of the market. Its annual supplies to Europe have shrunk from the previous 150 billion to 65 billion cubic metres of gas. European officials assure that they have already learnt how to live without Russian gas, so they will bring its purchases down to but nominal values in 2023. Their main hope is liquefied natural gas. Today the EU must make a crucial decision: whether it has passed the point of no return in gas business with Russia and whether it is certain that its economy will endure without supplies of Russian pipeline gas. Or, on the contrary, Europe will realise after all that the gas balance will not be achieved and the payment for so headlong a rush for LNG will be disproportionate. Assessment of the potential volume of LNG that will appear on the market before the end of the current decade will be the most important factor for making the decision.

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07
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