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. Last Updated: 07/27/2016

Railway Jam Halts Crude to Black Sea

The Railways Ministry this week halted shipments of crude oil and refined products to the main Black Sea export ports of Novorossiisk and Tuapse due to huge holdups on the railroads, trading sources said Thursday.

The two ports receive almost one-fifth of their volumes by rail, and the decision halted deliveries that account for about 240,000 barrels per day of crude and oil products.

"The ministry declared convention from Monday. It said it could last one week or more," one trader said. "So far we see no threat to the scheduled tankers but may face some if the convention is kept in place very long," he said.

Convention is a temporary suspension akin to force majeure.

Stocks at Novorossiisk are normally enough to keep supplies running for a week, and deliveries are still being made by pipeline.

"The ministry says some 6,000 rail tanks are now queuing on the North Caucasian railway. Some say the railway lacks locomotives to service both growing industry and passenger needs during the summer season," said another trader.

He said he currently also saw no major threat to exports as it was not the first time the railways had declared convention, although he added multiple halts were making traders nervous.

Sibneft, the Tyumen Oil Co. and Sidanco are the main shippers of crude oil by rail to Novorossiisk.

A spokesman for the ministry said the ban would end shortly.

"An order is being prepared on ending the moratorium," the spokesman said, adding that the order would be issued either Thursday or Friday.