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Russia's Urals crude supply to EU via southern Druzhba rises

(Reuters) - Russia's piped supply of Urals crude to the European Union via the southern spur of the Druzhba pipeline is set to rise 6% on a daily basis in the first quarter from the three months before, data from industry sources and Reuters calculations showed.

The EU pledged to stop buying Russian oil via maritime routes from Dec. 5. Supply via the Druzhba pipeline remains exempt from sanctions, though flows via its northern spur, which supplies Poland and Germany, dried up last month.

The southern branch of the Druzhba pipeline runs via Ukraine to the Czech Republic, Slovakia and Hungary, and has been the primary source of supply for their refineries for years.

Flows via Druzhba to those three countries will rise to about 3.1 M tons in the first quarter from some 3 M the quarter before, according to trade and industry sources and Reuters calculations.

Alternative oil suppliers to their plants include the Adria pipeline connecting Croatia's Omisalj port to Hungary and the Transalpine pipeline (TAL) that connects Italy's Trieste to Czech refineries.

Russian oil exports via Druzhba's southern spur over the last six month have been lower compared to the period from March to September last year, sources told Reuters.

"Average oil exports along the southern branch (of the Druzhba pipeline) in March-September 2022 stood above 300,000 bpd but went down to average some 250,000 bpd in October 2022 to March 2023," an industry source said.

The main buyer of Urals crude in Slovakia and Hungary is Hungarian oil and gas company MOL. The Czech Republic's sole buyer Unipetrol is controlled by Polish firm PKN Orlen.

Rosneft, Lukoil and Tatneft were the main Russian exporters via the route. MOL and Russia's pipeline monopoly Transneft did not reply to requests for comment. Russia's Energy Ministry declined to comment.

"The Czech Republic has a negotiated exemption for oil from the Druzhba pipeline, which is valid until the implementation of an alternative solution is completed," Orlen Unipetrol told Reuters.

Unipetrol has "secured sufficient supplies of crude oil for both our refineries in Litvinov and Kralupy nad Vltavou", the firm's representative said, with its refineries sourcing crude from "various regions".

Urals supplies via the northern spur of the Druzhba pipeline were fully suspended in February after Russia halted supplies of oil to Poland's PKN Orlen.

Germany voluntarily stopped importing Russian Urals via Druzhba from Jan. 1, 2023, with Germany and Poland hoping to make up for the shortage of Russian crude by importing Kazakh oil via the same pipeline.

Russia's pipeline monopoly Transneft has received requests from Germany and Poland for oil from Kazakhstan via Druzhba in April-June 2023.

Kazakh oil started flowing to Poland for onward delivery to Germany late in February for the first time. Kazakhstan plans to ship 20,000 tons of crude to Germany in March, and the same volume in April.

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