Ukraine’s state oil pipeline operator Ukrtransnafta has stopped pumping Russian crude through the southern branch of the Druzhba system to the EU, RIA Novosti news agency reported on Monday, citing Russia’s Transneft.
According to the report, transit supplies have been halted to Hungary, the Czech Republic and Slovakia.
Igor Demin, spokesperson for the president of Transneft, told the agency that transit through Belarus in the direction of Poland and Germany continues.
Demin explained that Russia cannot make payments for transit due to EU sanctions, although the Ukrainian company is insisting on 100% prepayment for its oil transportation services.
“When making a payment for transit through the territory of Ukraine, the funds were returned to the account of Transneft,” he said, adding, “Gazprombank, which services payments, notified us that the payment was returned in accordance with the EU regulations, that is, the seventh package of sanctions.”
Transneft stressed that it is working on alternative payment options for oil transit services via Ukraine, and has sent an appeal to Gazprombank.
Druzhba, which is one of the longest pipeline networks in the world, carries crude some 4,000 kilometers from the eastern part of European Russia to refineries in the Czech Republic, Germany, Hungary, Poland and Slovakia.
Oil reversed an earlier decline following the news, with benchmark Brent futures jumping as much as 1.6% to trade near $98 per barrel. US West Texas Intermediate (WTI) was also up to around $92 per barrel.