BELARUS NEWS AND ANALYSIS

DATE:

09/01/2007

Belarus, Russia seek to end oil dispute

By HENRY MEYER, Associated Press Writer 6 minutes ago

MOSCOW - Russia and Belarus sought Tuesday to resolve a damaging trade battle that has led Moscow to halt oil supplies to several EU nations via Belarus, causing fresh alarm in Western Europe over its reliance on Russian energy.

Russia on Monday stopped pumping oil to Europe via the Druzhba, or Friendship, pipeline that crosses Belarus, accusing its neighbor of siphoning off oil.

The Paris-based International Energy Agency urged both sides Tuesday to reach "a quick and clear resolution to the disruption," although it said the stoppage did not threaten supplies immediately since EU refineries maintain strategic oil stocks.

The European Union a day earlier called for a rapid resumption of oil deliveries and EU energy chief Andris Piebalgs said that he could convene a meeting later in the week of the bloc's Oil Supply Group to evaluate the situation.

Russia currently supplies a quarter of the EU's oil and over two-fifths of its gas consumption.

Merkel noted that Russia - as the Soviet Union - reliably supplied West Germany with gas during the Cold War, so that "it's right to enter into a relationship with Russia."

Poland relies on the pipeline for around 96 percent of its oil consumption. Russia is Germany's top supplier of oil, supplying roughly a third of its imports. About two-thirds of Russian oil for German consumers comes through the Druzhba pipeline.

The dispute came just days after Belarus and Russia reached a last-ditch agreement on gas prices that avoided a New Year's cutoff of natural gas for Belarusian consumers and potential supply shortages in Western Europe.

But the two countries are now in conflict over oil duties, with Russia determined to stop Belarus from re-exporting petroleum products made from processing Russian oil bought cheaply under the previous duty-free regime.

Russia and Belarus have been close allies, with Moscow relying on Minsk as a military buffer between it and NATO . In the mid-1990s they signed a loose union treaty.

Last week, Belarus announced it would charge an import duty of $45 per metric ton of Russian oil shipped to Western Europe in pipelines that cross Belarus. The move followed Russia's imposition of an export duty of $180 a ton on oil sold to Belarus.

Russia's Deputy Trade and Economic Development Minister Andrei Sharonov said Monday that Moscow would insist on Belarus canceling the import duty.

Natalia Leshchenko, an analyst with Global Insight, said that Belarus had a strong bargaining position as it was unworried at the consequences of the cutoff to Russian oil exports because it was already treated as a pariah in the West.

"Given the urgency of the matter, the dispute is likely to be resolved soon, and most likely at the expense of Russia," she said. "Transneft (the Russian state pipeline operator) and the Russian government are looking to face financial losses and damaged reputation, whereas the outcast status of Belarus in Europe gives it the benefit of invulnerability, which its government uses in full."

Source:

http://www.newsone.ca/westfallweeklynews/ViewArticle.aspx?id=41012&source=2

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