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Russian Transneft wants joint enterprise with Mero

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The Russian state-owned business Transneft responsible for national oil pipelines is planning to start a joint enterprise with the the Czech state company Mero ČR, the owner of the Czech section of the Druzhba pipeline and the IKL pipeline.

The Russian national giant Transneft that is operating the biggest network of pipelines in the world, is in negotiations with the Czech state company Mero ČR over founding a joint company. “The new business, Transneft and Mero’s operator, is being founded so that mediators are no longer needed and halts in oil supplies to Europe can be prevented,” the Czech company’s spokesman Igor Děmin told the agency RIA Novosti. Both companies are currently providing oil transportation based on the needs of their customers, such as oil refineries.

Fight for power?

Russians are quite ahead with their plans. “Founding a joint business is the last possible option,” said the Czech Republic’s Ambassador-at-Large for Energy Security Václav Bartuška. According to Mero’s Strategic Development and Facility Manager Libor Lukášek, a meeting of company’s representatives with Transneft did take place in December 2008, but no talks on founding a joint business were held. “It was a purely informative meeting regarding the reliability of oil transportation through the Druzhba pipeline. Mero isn’t even authorized to discuss such thing,” Lukášek said, adding that it must be a misunderstanding.

Russian agencies emphasise that a joint company would above all cut out intermediary companies from the oil business. Many companies in Russia are participating, besides oil supplies, also in oil sales. These companies are connected tightly to individual political clans. Transneft’s step may thus be a part of a fight for power on the Russian scene.

Getting rid of intermediaries also has an economic subtext. They always charge extra money for transportation, which makes the oil on the Czech market more expensive. The final price of oil from the Druzhba pipeline is more expensive than if the oil is transported to a port and then sold.

Problematic supplies

The Czech Republic has different priorities from those of Transneft, Bartuška said. “For us the key thing is regular supplies,” the “energy” ambassador said. About half a year ago the supplies of oil from Russia have been affected by significant cuts. “A monthly drop amounted up to 40%,” Bartuška said. The Russian oil had to be replaced with supplies from the Ingolstadt pipeline. “What is essential for us is that our refineries have enough oil,” Bartuška said.

At the end of last year there were no more problems with oil supplies according to Lukášek. “There is enough oil going through the pipelines.” Mero has managed to replenish the high-capacity tanks in Nelahozeves, he said. The oil from the state material reserves, which was used in the second half of last year when Russian oil supplies were halted, has thus been replaced.

Cuts in oil supplies have caused that about 3.2 million tones of oil were transported through the IKL pipeline, about 700,000 tones more than a year ago. Russian oil that was acquired from tankers in the Italian port of Trieste was also transported through the pipeline. From Trieste the oil was transported through the TAL pipeline to the German Vohburg from where the oil got to the Czech Republic through the IKL pipeline owned by Mero.

The Druzhba pipeline transported about the same amount of “black gold” as in 2007. Last year, a record volume of oil, totalling more than 8 million tonnes, was transported to the Czech Republic, with Mero being the only company transporting this strategic commodity to our territory. At the same time it is the biggest company storing strategic emergency oil reserves.

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