Building a world of
resilient communities.



Yukos Defaults on Long-Term Contracts to Supply Oil

Jan. 20 (Bloomberg) -- OAO Yukos Oil Co., Russia's biggest oil exporter last year, defaulted on long-term contracts to supply refiners after the government sold its biggest oil-producing unit to collect more than $20 billion in back taxes.

Yukos oil-trading unit Petroval, based in Geneva, told customers that deliveries may be missed, said John Lush, Petroval chief executive, in a telephone interview, declining to comment further. Yukos customers include PKN Orlen SA of Poland, Mol Rt. of Hungary and AB Mazeikiu Nafta of Lithuania.

The disruption of millions of barrels of supply is the biggest yet during the government's battle with Yukos, which has lasted more than a year. Crude oil prices last year reached a record of $55.67 a barrel in New York, in part on concern that Russian shipments may be reduced as global energy demand surged.

``If you start to see shipments out of Russia slowing down, it will have quite a pronounced impact on the crude market,'' said Bruce Evers, an analyst at Investec Securities in London. ``This just increases people's awareness that while Russia can produce a lot of oil, the reliability of supplies is very suspect.''

Russia seized OAO Yuganskneftegaz, which pumped 60 percent of Yukos's oil, and then sold a controlling stake in the unit for $9.3 billion, to collect back taxes and fines. State-owned OAO Rosneft took over Yugansk on Dec. 31. Crude oil prices were down 62 cents in New York at $46.93 a barrel, declining after an inventory report yesterday showed U.S. supplies are building.

Indefinite Suspension

Yukos spokesman Alexander Shadrin said Petroval handles a ``significant'' part of the company's exports, and declined to comment further. Lush at Petroval said the company had declared so- called force majeure, a legal clause that allows it to miss shipments because of reasons beyond its control. The declaration lasts as long as Yugansk is outside of Yukos's control, he said.

Mol Rt., Hungary's largest oil company, buys 60 percent of its crude from Yukos for its refineries, the company said in August. Mol agreed in 2003 to buy 7.2 million tons of oil a year for 10 years from Yukos, replacing a three-year agreement for 2.4 million tons a year. A Mol spokesman couldn't immediately comment on the matter.

Mol announced today that it will buy crude to supply its refineries at home and in Slovakia from Russia's OAO Lukoil. The Hungarian company will purchase 5 million metric tons of oil a year from Lukoil over five years, Mol said today in a stock exchange statement.

Mol's refineries in Szazhalombatta, near Budapest, and in Bratislava are connected to Russian oilfields through the Friendship pipeline.

PKN Orlen SA, the largest refiner in Poland, buys 40 percent of its crude from Yukos, the company said in August. The Plock- based company said then it will buy more from other producers if supplies from Yukos are disrupted. A spokesman couldn't immediately comment today.

Mazeikiu Gets Oil

Mazeikiu spokesman Giedrius Karsokas said ``yesterday it was and today'' oil supplies are flowing normally.

``Now I'm trying to contact our logistics department'' to find out what the declaration of force majeure means for Mazeikiu, Karsokas said in a telephone interview from the company's refinery in the western Lithuanian town of Juodeikiai.

Mazeikiu, Lithuania's biggest company by sales, owns the only oil refinery in the three Baltic states, a crude oil terminal on the Baltic Sea and pipelines. Last year the refinery processed 8.66 million tons of feedstock.

Yukos agreed in 2002 to deliver at least 4.8 million metric tons of crude a year to Mazeikiu through 2012.

ELTA newswire quoted Economy Minister Viktor Uspaskich yesterday as having told a parliamentary committee that the government was discussing possible new supply agreements with three oil companies.

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Find out more about Community Resilience. See our COMMUNITIES page
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.


This is a community site and the discussion is moderated. The rules in brief: no personal abuse and no climate denial. Complete Guidelines.

Solar Panels have been Benefitting the Climate ‘since 2011’

In 2011, solar power reached a tipping point. This was the year when the …

The Rise of Community Energy

Around the world, the idea that communities install, own, and enjoy some of …

State of The Transition, November 2016: Steps forward continue to outnumber steps back

The global energy transition remains in a state of net forward momentum as …

World Energy Outlook 2016 – Fatih Birol in Brussels

On 16 November 2016 the International Energy Agency (IEA) presented its …

Waiting for the Climacteric: or, the Return of the Greentard

...I want to broach some wider energy-related issues with the help of two …

Peak Oil Review - Dec 5 2016

A weekly roundup of peak oil news, including: -Quote of the Week -Graphic of …

The Curse of the Modern Office

The information society promises to dematerialise society and make it more …