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Rosneft Requests One-year Postponement of Start of Oil Supplies to the Zapolyarye – Purpe OTP

Rosneft Oil Company has approached Transneft with a request for downward adjustment of its planned supply of oil to the Zapolyarye – Purpe oil trunk pipeline (OTP).

Rosneft Requests One-year Postponement of Start of Oil Supplies to the Zapolyarye – Purpe OTP

Rosneft Oil Company has approached Transneft with a request for downward adjustment of its planned supply of oil to the Zapolyarye – Purpe oil trunk pipeline (OTP).

“Rosneft made this request to Transneft on 1 June,” Transneft’s Head of the Strategic Development Directorate, Rasim Mingazetdinov told reporters.

He said that previously Rosneft planned to supply 3.3 million tonnes of oil to the Zapolyarye – Purpe pipeline in 2017, 6.576 million tonnes in 2018, and 7.5 million tonnes in 2019. “Now they propose to deliver oil volumes of 5.5 million tonnes in 2018, and 7.1 million tonnes in 2019,” said Rasim Mingazetdinov.

It is worth noting that Rosneft’s new initiatives on loading the Zapolyarye – Purpe oil pipeline will have irreversible consequences for the project’s economic performance. The Company will be forced to apply extreme measures to Rosneft, as stipulated in the contract. Namely, under the preliminary oil transportation services contract dated 21 January 2015 and signed by all the companies, Transneft may claim fines for violation of the terms and volumes of oil supplies to the oil trunk pipeline system. Recently the Company received a letter from Rosneft with its latest, third adjustment to oil delivery volumes for the Zapolyarye – Purpe oil trunk pipeline.

The Zapolyarye – Purpe oil pipeline is being constructed on the initiative and at the request of oil companies. The project is based on the “pump or pay” principle and is financed by Transneft on condition of guaranteed resources supply by the oil companies.

After approval of the project and publication of the corresponding government decree, long before the application of the sanctions to the Russian Federation, the oil companies adjusted guaranteed volumes downwards. While one company, Rosneft, in addition to decreasing the delivery volumes, also violated its logistical obligations by redirecting oil from the Suzun, Tagulskoye, and Russko-Rechenskoye fields to support its own project, the Vankor – Purpe oil trunk pipeline, which has significantly affected Transneft’s return on investment.


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