BELARUS NEWS AND ANALYSIS

DATE:

06/01/2007

Belarus, Russia entrenched in a bitter energy row

By Andrei Makhovsky and Dmitry Solovyov

MINSK/MOSCOW (Reuters) - Belarus, feuding over energy with chief ally Russia, on Saturday subpoenaed the head of Moscow's oil pipeline monopoly Transneft to appear in court over administrative charges of illegal oil transits to third states.

Russia's Economy Ministry meanwhile handed a note to the Belarussian ambassador to Moscow, urging Minsk to scrap transit fees on Russian crude transits which it said were threatening stable supplies to consumers in Western and Eastern Europe.

Belarussian President Alexander Lukashenko -- tagged Europe's last dictator by Washington -- slapped on Wednesday a $45 per tonne fee on Russian crude oil pumped via Belarus to Europe. The decision is effective from Jan. 1, 2007.

In a sign the crisis was deepening, Belarus' state customs service said on Saturday it had sent a court subpoena to Semyon Vainshtok, president of Russian crude pipeline monopoly Transneft, ordering him to face a Belarussian court on Jan. 8.

"Breaching the legislation in force, Transneft has moved through Belarus' customs borders its commodity -- crude oil -- to third states without declaring it and paying a respective customs fee," a Belarussian customs official told Reuters.

"A protocol on administrative violations committed by Transneft President S.M. Vainshtok has been compiled by customs officials and its copy sent to the company's headquarters."

If found guilty, Vainshtok would have to pay a fine of between 100 and 500 Belarussian minimum wages. A minimum monthly wage is equivalent to around $15 in Belarus.

Transneft Vice-President Sergei Grigoryev told Reuters: "Today is a day-off. We have not received any telegrams from Belarus." He did not elaborate.

Russia is the world's second largest oil exporter and the Druzhba pipeline running via Belarus supplies around a fifth of Germany's demand as well as feeding Poland and other central European countries.

TIT-FOR-TAT

Moscow earlier this week forced Minsk to sign a deal doubling the price of imported Russian gas. In December, Russia slapped a full customs duty on all crude all exports to Belarus.

Russia calls Belarus' oil transit fees unprecedented and contradicting economic agreements between the two sides.

Moscow, which has long planned but never forged a union state with its Slav neighbour, says it was forced to charge Belarus an export duty on imports of crude oil, because it is being refined and unfairly sold at a profit on to Europe.

Moscow has also suspended white sugar imports from Belarus, accusing it of dumping cheap cane sugar on the market.

Russian Deputy Economy Minister Andrei Sharonov said the government had discussed with the Belarussian ambassador the possibility of talks with an official Belarussian delegation in Moscow on Jan. 9.

He told Russian NTV channel a 'peaceful scenario' may be found to scrap oil transit fees.

But, he added, otherwise "we will have to seek adequate measures ... to make our Belarussian partners look more seriously at the situation in which they have put Russia and Russian firms having contracts to supply this crude to Eastern and Western Europe".

Belarus's economy is still largely run on a Soviet-style command system and its industry relies heavily on cheap energy imports to remain profitable.

(Additional reporting by Dmitry Zhdannikov in Moscow)

Source:

http://in.today.reuters.com/news/NewsArticle.aspx?type=businessNews&storyID=2007-01-07T022914Z_01_NOOTR_RTRJONC_0_India-282517-1.xml