Czechs want direct oil supplies from Russia

Supplies of Russian oil to the Czech Republic unexpectedly dropped in July after the country signed an agreement to host a radar base as part of a US missile shield. The timing sparked speculation that the drop was a retaliation, but Russia said the cuts were due to hiccups in complex deals among various intermediaries.

Vaclav Bartuska, an ambassador at large in charge of energy security, told Reuters on the sidelines of an energy conference in Prague the government was in favor of the change and negotiations were under way.

Bartuska said Russia was interested in dealing directly with the Czech government. “There is an interest (from Russia) to negotiate directly with the state,” Bartuska said. “They want to reduce (the role) of middlemen, Russian citizens and Russian firms registered in tax havens all over the world...we often do not even know their names,” Bartuska said.

Imported oil is purchased by Czech refiners, dominated by PKN Orlen’s unit Unipetrol. Unipetrol gets its crude through PKN, and the government is not involved. Bartuska declined to give further details, saying the talks were at an early stage. “I think it is Russia’s effort to make the situation more transparent,” he said, adding he assumed Russia had offered a similar deal to other countries as well.

Deliveries to the former Soviet-block country had been cut by around half of the usual 500,000 tons in July. Russian officials said the cuts were not political and Prime Minister Vladimir Putin ordered supplies to central European country be returned to full levels. But Bartuska said deliveries were still not back up to standard levels. The Czechs take most of their 7.7 million ton annual supplies via the Druzhba pipeline from Russia, but also have an alternative link to Germany which can satisfy the country’s demand when needed.