BELARUS NEWS AND ANALYSIS

DATE:

09/01/2007

Moscow stops oil exports to Belarus

By Michael Mainville

THE WASHINGTON TIMES

MOSCOW -- Russia yesterday halted oil exports to Belarus amid a bitter trade dispute between Moscow and Minsk, cutting off supplies to several European countries and highlighting concerns over Russia's reliability as an energy supplier.

Accusing Belarus of stealing oil headed for Europe, Russia suspended exports via the Druzhba ("Friendship") pipeline, halting supplies to several countries, including Germany and Poland.

Authorities in Belarus said oil was taken as a form of transit payment imposed on Jan. 1 that Moscow has refused to pay.

The halt in oil exports comes a year after Russia cut off supplies of natural gas to Ukraine because of a price dispute, disrupting supplies to parts of Europe during a chilly January 2006.

The oil cutoff is unlikely to cause a repeat of last year's panic over gas supplies because European refineries typically carry several months of inventory.

Nevertheless, yesterday's cutoff renewed concerns over Russia's willingness to use its vast oil and gas exports as a political weapon.

It marked a major escalation of a crisis in relations between Russia and Belarus, a country long considered one of Moscow's closest allies.

"Belarus has cast caution to the wind by starting to take oil because Russia is not paying a duty it illegally imposed. This looks like a trade war," Andrei Sharonov, Russia's deputy economic development minister, told Ekho Moskvy radio.

He warned Russia was ready to take economic steps against its neighbor: "One must not forget that Russia is the biggest market and No. 1 economic partner for Belarus. Therefore, we have the possibilities to apply measures to Belarus."

Russian pipeline monopoly, Transneft, said in a statement yesterday that it had been forced to act after Belarus "began tapping oil destined only for customers in Western Europe from the Druzhba pipeline unilaterally, without any warning."

The company said Belarus had siphoned off 79,000 metric tons of oil since Saturday.

Belarus insisted it was not to blame for the crisis and was acting legitimately.

"The Belarusian side is not at fault for the drop in pressure at the entrance of the Druzhba oil pipeline," Foreign Ministry spokesman Andrei Popov said. "Belarus was forced to take measures to avoid economic damage and a shortage of vital fuel and energy resources."

A Belarusian delegation headed to Moscow last night for urgent talks.

German Economy Minister Michael Glos said reserves would guarantee oil supplies even in the event of lengthy disruptions.

But he also said the incident demonstrated that "one-sided dependencies must not be allowed to develop."

Europe is heavily dependent on energy supplies from Russia, the world's second-largest oil exporter after Saudi Arabia.

The 2,500-mile-long Druzhba pipeline, built in the 1960s to tie then-communist Eastern Europe to Soviet energy supplies, carries 18 million metric tons of oil to Poland each year and 22 million metric tons to Germany, or one-fifth of its oil imports.

The pipeline has a southern branch that supplies oil to Ukraine, Hungary, Slovakia and the Czech Republic.

The dispute began when Russia this year imposed new export duties on oil sold to Belarus, where the economy is heavily dependent on refining Russian crude.

Belarus retaliated by imposing a $45-per-ton transit fee on Russian oil headed for Europe that Moscow has refused to pay.

The oil row follows a dispute over the more than doubling of Russian natural-gas prices for Belarus. The gas dispute was resolved on New Year's Eve, only hours before Russia was set to cut off supplies to the country of 10 million.

The energy disputes are severely straining ties between the two traditional allies, who in the past have discussed forming a political union.

Belarusian President Alexander Lukashenko -- branded Europe's last dictator by the United States -- has been showing signs of increasing independence from Moscow since his re-election last year.

Moscow insists it is seeking market prices for energy supplies and that its neighbors no longer deserve Soviet-era subsidies.

But critics accuse the Kremlin of using its vast energy reserves as a political tool to restore its international influence.

Source:

http://washingtontimes.com/world/20070108-103530-8630r.htm