Moscow -- Transneft plans to file an appeal with the Supreme Economic Court of Ukraine against a ruling by the Rivne appellate economic court that recognized Ukraine's ownership rights to sections of the Samara-West and Grozny-Armavir-Trudovaya oil product pipelines that run through its territory, totaling 1,433 km, the adviser to the Russian oil pipeline monopoly's president, Igor Demin told Interfax.
The pipeline sections are owned by Prikarpatzapadtrans, a subsidiary of Russian company Transnefteprodukt, which in turn is a wholly owned subsidiary of Transneft, but the court ruled that they were processed incorrectly.
“Formally, for now this oil product pipeline is owned by Transneft, so we will continue to transport oil products along this pipe,” Demin said, adding that the company does not currently see any correlation between events in Ukraine that took place at the beginning of the year and the rules of Ukrainian courts.
He recalled that this matter began in 2005, and remarked that “higher courts, as a rule, make more balanced rulings than this ‘collective farm’ court.”
He also recalled that Ukraine’s Supreme Economic Court ruled on October 10, 2005 that all disputes about recognition of ownership rights cannot be resolved in Ukraine’s economic courts.
If Russian property is expropriated, Demin said, Transnefteprodukt will be forced to halt shipments of oil products on this route. He remarked that demand for oil products in Ukraine has fallen dramatically in recent years and the main source of revenue from the use of this pipeline is transit shipments of oil products to Hungary, which however fell by half in 2013 and are continuing to decline.
He also said that Transneft cannot start overhauling this pipeline, which increases environmental risks for Ukraine. Furthermore, the scale of theft from the pipeline has growth dramatically and the law enforcement authorities are not responding to the situation properly, he said.
Demin recalled that an Austrian company was interested in buying this pipeline, but now this issue is on the backburner. “As a result, Ukraine will get a big pile of scrap metal and 900 Ukrainian citizens will lose their jobs,” he said.
Transneft will be forced to redirect these shipments to Belarus and onward to the Latvian port of Ventspils, he said. “Latvia will be pleased, as Ventspils provides 40% of revenues to the country’s budget,” Demin said.
