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Russian oil output falls further on oil contamination

Two unnamed industry sources have told Reuters that Russia’s oil production has continued to fall in the wake of April’s discovery of contaminated oil shipments in the Druzhba pipeline to Europe.

Some five million tonnes of oil were found to be contaminated with organic chloride. While Russia has already taken back two million tonnes and agreed to take back a further tonne from Belarus, much of the affected crude remains trapped in pipelines in Belarus and other eastern European countries.

According to Reuters’ sources, Russian oil exports through Transneft pipelines, of which Druzhba is one, decreased by 6% between May 1 and May 26. This appears to have affected overall production, because Russia’s oil output averaged only 11.126 million barrels per day (bpd) over the same period, which is even below its assigned limit under the OPEC-led production curbs deal.

The drop in production from Russia, combined with falling exports from Venezuela and Iran, has cause oil prices to strengthen. Russia has, however, restarted some oil shipments to Belarus, Slovakia, and Ukraine, while MERO, a Czech pipeline operator, reported that it had resumed oil shipments to the Czech Republic via the Druzhba pipeline at midday local time on May 27.

While ExxonMobil has ended many of its joint ventures in Russia due to US and European sanctions, it still operates the Sakhalin-1 project and has a substantial downstream presence in the country, including marketing its lubricants through a network of 25 independent Mobil distributors.

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