Russia oil supplies to Lithuania halted to Feb ’07

The stoppage has cut off Russian oil supply to the Baltic states’ only refinery, Lithuania’s Mazeikiu, and could unravel the plant’s $2.6 billion sale to Polish oil company PKN Orlen.

“We have already said that at least 10 actions are needed to test the pipeline before starting actual repairs. The last action on this list is scheduled for Jan. 30,” a spokesman for environmental agency RosPrirodNadzor said.

“It does not necessarily mean that repair work cannot start earlier, but this issue should be discussed with (oil pipeline monopoly) Transneft,” he added.

Transneft was not immediately available for comment.

Russian supplies to Lithuania dried up after Russian firms lost the bidding battle for Lithuania’s refinery and oil export terminal to PKN Orlen.

PKN bought the assets in May from stricken Russian oil firm YUKOS, now bankrupted by Russian tax claims totalling $33 billion, but it says it could hand them back if their value falls significantly before the end of the year.

Analysts say PKN’s successful bid was a blow for the Kremlin’s drive for a greater role in Europe’s energy industry, and some suspect that the halt in pipeline supply to Mazeikiu was meant to put pressure on PKN and Lithuania.

Transneft has said it will not abandon Lithuania in the way it previously walked away from the Latvian outlet of Ventspils after a row between Riga and Moscow.

With no oil going to Lithuania, Transneft plans to increase supplies to Russia’s main Baltic Sea outlet of Primorsk to a new all-time high of 5.86 million tonnes (1.42 million barrels per day) in September, up from 5.8 million tonnes in August.

Transneft had said it was looking to boost Primorsk’s capacity to 1.4 million bpd by the end of this year, but has in fact done it much earlier to accommodate volumes lost on the Lithuanian route.

The boost to Primorsk and the re-routing of oil to Ukraine’s Black Sea ports of Odessa and Yuzhny will allow overall shipments to remain largely unchanged despite a significant loss of throughput capacity to Lithuania.

Transneft had been supplying around 250,000 bpd to Lithuania’s Butinge terminal and the Mazeikiu refinery until the leak forced supplies to halt from August.