Posted By Global Banking and Finance Review
Posted on March 5, 2025
PRAGUE (Reuters) -Payment issues linked to U.S. sanctions on Russia were behind the latest halt in oil supplies by Russia to the Czech Republic via the Druzhba pipeline, two sources familiar with the matter told Reuters.
The halt was due to payment issues between Czech refineries' Polish owner and Russian suppliers, the Czech industry minister was cited as saying late on Tuesday.
It was initially unclear why flows were halted on Tuesday.
The disruption forced refiner Unipetrol, owned by Poland's Orlen, to ask to tap state reserves, and the Czech government agreed to release 330,000 metric tons of crude oil to the company, the CTK news agency reported on Wednesday.
Payments stalled amid issues stemming from the latest sanctions package the U.S. placed on Russia, the two sources told Reuters. As result, the Russian side cancelled supply nominations for March deliveries, one of the sources said.
Russia's oil pipeline operator Transneft did not respond to a request for comment on Wednesday, and neither did Orlen.
Orlen said on Tuesday it operated in accordance with sanctions laws and regulations, but did not comment on why oil supplies were halted.
In December, Russia had briefly stopped supplies via the pipeline in a dispute over payments.
Refinery operations have remained at full capacity, and Industry Minister Lukas Vlcek said on Tuesday in a statement that there was no risk of shortages.
Payment issues caused the halt in supplies, he told Czech Television late on Tuesday, without mentioning the sanctions.
Vlcek has said the country could switch to the TAL pipeline which has been upgraded, if the stoppage of flows via Druzhba is long term.
The Czech Republic imports Russian crude through Druzhba and other crudes via the TAL pipeline, a key oil artery running from the Italian port of Trieste to Central Europe via Germany.
Due to upgrades, the Czechs are set to fully rely on TAL shipments from July, ending Prague's need to import Russian crude. The contract between Russia's Rosneft and Orlen for supplies to Unipetrol expires in the middle of 2025.
(Reporting by Jason Hovet, Jan Lopatka and Marek Strzelecki; Editing by Bernadette Baum)