BELARUS NEWS AND ANALYSIS

DATE:

09/01/2007

Oil prices briefly rise as Belarus halts oil flow to Europe

By Judy Dempsey

BERLIN: Oil prices climbed briefly Monday after oil flows were halted from Russia through a Belarus pipeline that supplies 80 percent of Poland's needs and more than a fifth of Germany's.

But major oil companies and the European Commission struck a relaxed tone, citing warm weather across Europe and an adequate level of reserves that officials said would safeguard Europe from any temporary shortfall.

Total, the French energy group, had expected to receive shipments of oil Monday morning for its two refineries in Germany, which import 11 million tons of oil a year from Russia. By Monday evening, the company said it was still waiting for supplies to come through the Druzhba, or Friendship, pipeline that transmits Russian oil across Belarus to Europe.

"We did not receive any warnings in advance," said Delphine Saucier, a spokeswoman for Total Germany. She said she did not know when deliveries would resume. In Poland, the energy company PERN said its shipments were stopped too, also with no warning.

Crude oil for delivery in February initially shot up before giving up some of its gains to close down 22 cents at $56.09 a barrel Monday on the New York Mercantile Exchange. Brent crude traded in London rose above $57 a barrel before falling back to $55.25, a drop of 40 cents.

Russia is the world's second-largest exporter of oil, after Saudi Arabia, with 40 percent of its shipments passing through the Druzhba pipeline.

This is the second time that energy supplies to European companies have been cut off. A year ago, Gazprom, Russia's state-owned energy company, stopped sending natural gas to Ukraine because of a price dispute.

Europe was immediately affected in that conflict, as Ukraine siphoned some of the Russian gas destined for European markets to make up for the shortfall of its own Russian imports. During one of Europe's coldest winters, when demand was at a peak, several countries reported lower gas deliveries. There was also an outcry by the European Union.

This time, however, reaction to the dispute between Russia and Belarus has provoked little panic. One reason is that the weather across Europe is unseasonably warm. Another is that reserves are full and stockpiles high.

"You can sleep soundly. Our reserves are full," said Saucier. Andris Piebalgs, the EU energy commissioner, said Monday "there was no immediate risk" to EU oil supplies from the Belarus pipeline cuts.

Oil refiners across East and Central Europe have responded with a measure of equanimity, too. Bram Buring, an energy analyst at Wood & Co. in Prague, said large oil companies in Poland, Hungary and the Czech republic had built up stockpiles for 14 days, and there were strategic stockpiles built up by state and industry that could last 90 days.

Source:

http://www.iht.com/articles/2007/01/08/business/impact.php