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Druzhba Pipeline Accident: Key Implications

  • ID: 5138643
  • Report
  • August 2020
  • Region: Global
  • 55 Pages
  • National Energy Security Fund
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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 an 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 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 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
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1. Introduction    

2. Beginning of the scandal. A chronology of the Druzhba. Accident and the first consequences

3. Official investigation into the causes of the accident     

4. War between Rosneft and Transneft     

5. Settlement of compensation disputes with other countries     

  • Belarus     
  • Poland     
  • Other countries   

6. Settlement with other Russian integrated oil companies     

7. Discussion of reform of the system of oil quality assurance and oil transport control     

8. New round of the fight between Rosneft and Transneft: a dispute on prices     

9. Conclusion

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All materials and sources used for issuing each report are thoroughly verified and analyzed by experts. The information is based on industry statistics, data of oil and gas companies, information of federal and regional mass-media, materials of conferences and round tables.

The analyst has pored on the following goals:

  • Analyses of oil & gas and power industries, political risks within the energy sector, geopolitical problems in connection with the production of hydrocarbons and their supply to the global market, strategic development of companies, new production and transportation projects
  • Consulting on the influence of political factors on the oil & gas business, decision-making within Russian energy companies and government bodies dealing with the energy industry
  • Development of energy business concepts in Russia
  • PR services for oil & gas corporations
  • Analysis of images and reputations of energy corporations