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Czechs talk with Russia on direct oil supplies

The Russian government has proposed cutting middlemen from oil supplies to the Czech Republic to improve transparency of the trade, a Czech energy security official said on Tuesday.

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. 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.

Oil firm Tatneft blamed lack of crude. 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.


Bartuska also said he would push for more transparency in how companies within the European Union negotiate prices when they buy oil and gas from Russia. The move should be a first step in creating a united energy policy of the EU, one of the Czech Republic’s efforts when it takes over EU’s rotating presidency in January. “We all...have an interest to agree within the EU on some united policy,” Bartuska said. EU countries should share information on prices for which they buy oil and gas from Russia, he said. “The basics is to stop lying to each other for how much we buy primary commodities,” Bartuska said. “I want an internal disclosure of (prices), without which no unified policy is possible,” Bartuska said. (Reuters)