May 6, 2019 / 12:49 PM / in 14 days

UPDATE 2-Ukraine says clean Russian oil starts flowing from Belarus

* Not clear if oil has started flowing towards Poland and Germany

* Complaints over contaminated oil emerged late in April

* Druzhba pipeline normally transports around 1 mln bpd of oil (Recasts with Ukraine saying clean oil starts flowing from Belarus)

By Natalia Zinets, Andrei Makhovsky and Gleb Gorodyankin

KIEV/MISNK/MOSCOW, May 6 (Reuters) - Pipeline operator Ukrtransnafta said on Monday that clean Russian oil had started flowing from Belarus towards Ukraine and it was ready to resume oil exports to the European Union following a transit hiatus over contaminated crude.

Flows through the Druzhba pipeline were suspended in late April because tainted crude had entered the system, sending shocks through global oil markets and damaging Russia’s image as a reliable supplier of energy.

The southern spur of the Druzhba pipeline passes from Belarus through Ukraine to Slovakia, Hungary and the Czech Republic. It was not immediately clear if clean supplies were also flowing on the northern spur, which runs directly between Belarus and Poland and Germany. (For a map of the oil pipeline, click on: tmsnrt.rs/2DytnnM)

“The oil with the quality, which is in line with the standard, has started to flow...to the Druzhba pipelines system in the direction of Ukraine for further transportation to the EU countries,” Ukrtransnafta said.

It said that the deliveries of clean oil started at 1417 Kiev time (1117 GMT).

The Russian oil pipeline monopoly Transneft did not reply to a request for comment.

The Energy Ministry in Moscow said on Saturday that clean Russian oil had arrived at the Mozyr hub in southeast Belarus, where the Druzhba pipeline splits to the north and the south.

However, earlier on Monday, sources at Belarusian state oil firm Belneftekhim and in the trading sector said that Belarus had no idea when clean Russian oil flows would resume. The section of the pipeline inside Belarus is controlled by a local firm, Gomeltransneft Druzhba.

The clean oil is backed up behind millions of barrels of contaminated crude in the pipeline system and there is no clear plan yet on how to discharge the tainted supply, traders and industry sources have said.

The Soviet-built Druzhba (Friendship) pipeline normally transports around 1 million barrels per day of crude, which accounts for some 1 percent of global oil trade.

Transmission via the pipeline was halted due to high levels of organic chloride, a chemical compound used to boost oil extraction by cleaning wells and accelerating the flow of crude.

Options for disposing of the contaminated oil include selling it at a heavy discount or storing it in tanks. But customers are not keen and there is insufficient storage capacity, trading sources say.

Some crude that reaches Mozyr is fed into a refinery there. The Mozyr plant has yet to resume crude processing and is still cleaning tainted equipment, the Belneftekhim source said.

Separately, the Russian Baltic Sea port of Ust-Luga, which is linked to Druzhba, is still loading contaminated oil onto tankers, trading sources said. It was hard to find a buyer for this oil, they added.

The Russian Energy Ministry has said clean oil was expected to arrive at the port on May 7.

Reporting by Andrei Makhovsky, Gleb Gorodyankin, Natalia Zinets and Vladimir Soldatkin; Writing by Vladimir Soldatkin; Editing by Dale Hudson and Kirsten Donovan

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