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UPDATE 1-Belarus says months needed to restore clean oil supply via Druzhba pipeline

Andrei Makhovsky and Katya Golubkova

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MINSK/MOSCOW, April 30 (Reuters) - Months of work will be needed to restore clean oil supplies via the Druzhba pipeline from Russia to Europe, a Belarusian state energy company said on Tuesday, after Western oil consumers suspended imports of Urals crude due to contamination.

Poland, Germany, Ukraine, Slovakia and other countries halted oil imports via Druzhba last week after finding contaminants that can damage refinery equipment.

A long outage could force refineries in Eastern Europe and Germany to cut operations and prompt Moscow to reduce oil production. It could also trigger claims by Western oil buyers against Russian producers and pipeline monopoly Transneft for lost profits as they struggle to sell contaminated oil.

The significance of any damage is not yet clear, nor is it known who will foot the bill. Belarus, which processes Russian crude into refined products for sale abroad, estimated its loss from a reduction in product exports at $100 million.

Russian President Vladimir Putin will meet the head of Transneft, Nikolai Tokarev, on Tuesday to discuss the contamination, Kremlin spokesman Dmitry Peskov said.

On Tuesday, Russia and Belarus - where Druzhba splits into two routes, with the southern leg going to Ukraine, Slovakia, Hungary and the Czech Republic and the northern spur routed to Poland and Germany - held a second day of talks in Moscow.

On Monday, Moscow said it had started to supply clean oil to the border with Belarus, but Minsk denied the oil had reached the country.

On Tuesday, state energy company Belneftekhim said its Mozyr refinery was expected to receive clean oil on May 4 at the earliest. The Russian energy ministry put the date at May 2-3.

The ministry gave no explanation for the different timing. Belarus said that before clean oil reaches Mozyr, contaminated crude should be forced out of the pipeline.

Some 50,000 tonnes of contaminated oil should be forced out in Russia and 120,000 tonnes on the Belarusian side, Belneftekhim said in a statement. Belarus will store its contaminated oil at Mozyr.

"The measures taken would allow for the restoration of only one of Druzhba's lines. Full restoration will take a couple of months of heavy work," Belneftekhim said. It did not specify which parts of Druzhba would be immediately decontaminated.

Druzhba can pump up to 1 million barrels per day (bpd), amounting to 1 percent of global crude demand. In total, Russia is exporting around 4 million bpd and other destinations in the south, northwest and east are unaffected, traders said.


The contamination comes as Russia plans to boost monthly Urals exports to five-year highs in May, a preliminary schedule showed, before the expiry of a deal on output cuts agreed with the Organization of the Petroleum Exporting Countries.

Traders said on Tuesday there was no change so far to the plan. Transneft said that in May, state-run Russian Railways may transport 100,000 tonnes of oil by rail. It did not specify the oil quality.

Transneft is investigating the matter, Putin said on Saturday, adding that this could lead to a wider inquiry, possibly including law-enforcement agencies.

The pipeline problem has cut off a major supply route for Polish refineries owned by PKN Orlen and Grupa Lotos , as well as plants in Germany owned by Total , Shell, Eni and Rosneft.

(Reporting by Andrei Makhovsky in MINSK; Maria Kiselyova, Maria Grabar, Anton Kolodyazhnyy, Olga Yagova, Gleb Gorodyankin and Gleb Stolyarov in MOSCOW; Writing by Katya Golubkova; Editing by Dale Hudson and Jason Neely)