Russian pipeline leak halts flows to Mazeikiu
The ruptured segment of the Soviet-era pipeline may take as long as a year to repair fully, Interfax reported yesterday, citing an official at the Natural Resources Ministry. A 70-kilometer section of the link must be replaced. The pipeline branches in several directions in neighboring Belarus, with one arm terminating at Mazeikiu near the Baltic Sea and two others carrying crude to eastern and central Europe. Mazeikiu is the main consumer of Russian at the northernmost section of Druzhba. English said Mazeikiu is scrambling to secure oil deliveries by tanker and hopes to increase output to 90% of capacity by the end of the month.
PKN Orlen SA, Poland' biggest oil refiner and fuel retailer, is buying Mazeikiu for $2.34 billion. Mazeikiu's previous owner, OAO Yukos Oil CO., was forced to sell the company after Russia filed $30 billion in back taxes against Yukos and jailed the Moscow-based company's CEO, Mikhail Khodorkovsky. Lithuanian Prime Minister Gediminas Kirkilas said in a press conference broadcast on the government's Web site. "We are told it's due to technical issues, and it seems those issues do exist in reality." OAO Lukoil, Russia's biggest oil producer, said in June Orlen may have difficulty buying crude because Russian companies may find it more profitable to sell to other refiners. Poland is calling on the European Union to draft a common energy policy toward Russia, which US Vice President Dick Cheney accused in May of using energy to "blackmail" its neighbors. (Bloomberg)
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