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. Last Updated: 07/27/2016

Oil Pipeline Plan Raises EU Fears

LONDON -- A new Russian crude oil export pipeline may cut supplies to refineries in Hungary, Slovakia, Germany and other central European countries, PVM Oil Associates said Friday.

Russia plans to build a new link that will deliver at least 1 million barrels of oil per day for export by tanker from the port of Primorsk on the Baltic Sea.

The pipeline will also reduce supplies of Urals, Russia's major export blend of oil, to refiners in Lithuania, Poland, Ukraine and the Czech Republic, PVM managing director Johannes Benigni said.

The new, 1,000-kilometer pipeline will run from Unecha, near the Russian-Belarussian border, to Primorsk. It will cut deliveries of Urals through the Druzhba inland pipeline to Europe, forcing Central Europe's refiners to buy more expensive oil from elsewhere, PVM said.

"The reduction of supplies through the Druzhba line will wipe out the price advantage of lower pipeline tariffs compared to seaborne barrels," Benigni said in a statement. "Thanks to cheap crude supplies, refiners along the pipeline enjoy healthier margins than their counterparts who depend on supplies from sea."

Central European refineries will have to pay from 50 cents to $4 more per barrel for seaborne oil deliveries, PVM said.