Ukraine suspends oil supply to European countries, says Russian oil major Transneft

Russian oil giant Transneft on Tuesday made a sensational claim that Ukraine had suspended Russian oil pipeline flows to countries in central Europe citing payment issues.

Reportedly, the southern Druzhba pipeline, also called the Friendship pipeline, has been halted since August 4.The suspension of oil was confirmed by MOL, a Hungarian energy firm and Transpetrol, a Slovak pipeline operator.

An estimated 250,000 barrels per day (bpd) is supplied by the Russian side through this pipeline andif the suspension continues, countries such as Slovakia, Hungary and the Czech Republic might run out of oil as all of them are heavily relianton Russian crude without any alternative in sight.

An uneven payment system

Transneft explained the issue by citing European financial sanctions which were acting as the bottleneck. Reportedly, Transneft made the payments throughGazprombank which is not on the list of sanctioned Russian companies.

Gazprombank made the payment last month on July 22 but a few days later, July 28 to be precise, the money was returned. It is pertinent to note that under the European Union sanctions, the banks in Europe have to seek approval from respective government authorities.

Earlier, the banks had the authority to decide amongst themselves on accepting and rejecting the payment. However, the officials in Brussels are yet to come up with a cogent mechanism that can help streamline the payment system.

European countries have tried to present a united front against Russia, however, whenever the situation has turned a little pear-shaped, they have backtracked.

The war has been going on for months and yet the European continent has only been able to reduce their combined gas dependency on Russia by a tiny five per cent.Last year, Russia provided a whopping 40 per cent of Europe's total consumption of natural gas.

(With inputs from agencies)

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