OREANDA-NEWS. November 16, 2011. The dispute on technological oil, which has been in the oil pipelines of the Latvian-Russian joint venture LatRosTrans Ltd (LRT) for almost 20 years, should be addressed for the first time on the merits in the hearing planned on November 24 at the Latgale Regional Court (in Rezekne). LatRosTrans feels confident about its ownership of the technological oil.

The Byelorussian company “Polotsktransneft Druzhba” unexpectedly filed a claim in court a year ago, holding a view that the technological oil in the amount of 150 thousand tons belongs to them, although the Byelorussian company has not succeeded to prove its ownership rights to this oil. The Manager of LatRosTrans Igors Stepanovs expresses a hope that the court will finally address this case on the merits, as up to now the delay has been caused exclusively by the Belorussian side – due to amendments to the claim by the Byelorussian party. Stepanovs suggests that the reason for a claimant delaying hearing of the case on its merits is extremely unusual and can only mean that they lack confidence in their case. It seems that the only motive for the Byelorussian company “Polotsktransneft Druzhba” unsubstantial claim is hindering the restructuring and future development of LatRosTrans.

Taking into account that the court has passed a ruling on securing the “Polotsktransneft Druzhba” claim and therefore most of the technological oil has to remain in the pipeline, there is still relatively high ecological risk. In order to decrease those risks last year LRT had started vacating the oil pipeline from the oil, performed cleansing and conservation procedure in accordance with the latest technologies. But due to the “Polotsktransneft Druzhba” claim this work had to be stopped.

Recent history of the case

Initially the Byelorussian company “Polotsktransneft Druzhba” required to return the technological oil in the amount of 150 thousand tons in the pipelines of LatRosTrans, the value of which is about LVL 48.7 million (USD 90 million or EUR 69 million) according to calculations of the Byelorussian company. The claim was suddenly amended on September 15, 2011, requiring only 110 thousand tons of oil and a monetary compensation for the remaining 40 thousand tons of oil – LVL 13 million (EUR 18.5 million). At the moment the Byelorussian party has commenced an active campaign in the Russian media with a view to explain the sudden changes in the claim, yet there is nothing mentioned about substantiation of the claim as such.

These amendments to the claim, which were submitted to the court only two months ago, are most likely linked to commencement of cleansing of the oil pipeline a year ago. In order to fix the oil pipeline vadu Polocka-Ventspils that has not been used for 9 years and to adjust it for new business needs, last year LatRosTrans started vacating the oil pipeline from the oil, performed cleaning and conservation of the pipeline by filling it with nitrogen in accordance with the latest technologies. Therefore, a part of the technological oil – 40 thousand tons – were pumped out from the pipeline Polocka-Ventspils and placed into a tank of Ventspils nafta termināls. The process of cleansing and conserving the oil pipeline was stopped after the court ruling on December 7, 2010, which secured the claim of the Byelorussian company “Polotsktransneft Druzhba”, prohibiting to use and/or utilize the technological oil in the oil pipeline Polotsk-Ventspils owned by LatRosTrans in the territory of the Republic of Latvia. At the same time, the court declined the request of the Byelorussian company “Polotsktransneft Druzhba” to seize also the 40 thousand tons of oil that was already pumped out from the pipeline “Polotsk-Ventspils”, considering that there are no grounds to seize this oil.

If the Latgale Regional Court of the Republic of Latvia will still decide to recognize ownership rights of the Byelorussian company “Polotsktransneft Druzhba” to the technological oil in Latvia, the Byelorussian party might have to cover the costs of LatRosTrans for storage of 150 thousand tons of oil in the pipelines of LatRosTrans for nearly 20 years, which will possibly exceed the amount, for which this oil could be sold now.