Report says Russia could cut pipeline to Lithuania's only refinery

Aug 16, 2006, 12:20 GMT

Moscow - Russia could shut down the 40-year-old pipeline that feeds Lithuania's Mazeikiu refinery due to disrepair, Semyon Vainshtok, the president of Russian Transneft pipeline monopoly told the Moscow Times newspaper Wednesday.

Transneft cut supplies to Lithuania's only oil refinery following an oil spill from the ageing pipeline two weeks ago. The pipeline is, however, still supplying refineries in Belarus, according to the report.

The discontinuation of supplies to Mazeikiu comes after Polish energy company PKN Orlen won the right to purchase the Lithuanian refiner. Rival bidders included Russia's Lukoil and Kazakhstan's KazMunayGaz.

Vainshtok said Transneft could be forced to shut down the pipeline altogether, pending the outcome of an investigation. 'This could happen,' he told the Moscow Times.

'You understand that the lifespan of a pipeline according to industry norms is 30 years. Druzhba-1 is 42. ... It is made out of metals that are now forbidden,' he said.

The accident in the Bryansk region earlier this month underscored growing concern over corrosion in Russia's ageing pipeline network.

However, the resulting halt in supplies to Mazeikiu has also provoked accusations that Transneft is attempting to bring the Lithuanian refiner under Russian control.

Last week PKN Orlen president Igor Chalupiec called on Transneft to resume supplies to Mazeikiu or risk being perceived as an unreliable supplier.

Vainshtok has flatly denied that the supply cut to Mazeikiu was in any way political and said it was entirely due to the accident on the ageing pipeline.

'We are an apolitical company,' he told the Moscow Times.

Minority-owned by the Polish state, PKN Orlen is the largest refiner in Central and Eastern Europe. It, however, owns no oil fields and is heavily reliant on Russian supplies.

It is believed that Orlen's bid for Mazeikiu won the Lithuanian government's approval due to the fact that Poland is a fellow member of NATO and the European Union at a time when energy security and partnership is topping the policy agendas of both countries.