BELARUS NEWS AND ANALYSIS

DATE:

10/01/2007

No Russia-Belarus oil transit deal yet - Gref

MOSCOW, January 10 (Itar-Tass) - Russia and Belarus on Tuesday failed to reach an agreement on Russian oil transit, Economic Development and Trade Minister German Gref said at the end of his meeting with Belarussian Deputy Prime Minister Andrei Kobyakov on Tuesday.

Gref said the meeting was in fact "preparation for talks" and noted it ended "on a positive note."

Russia insists on the invalidation of the transit duty on Russian crude and the resumption of oil transit to Europe. "We request Belarus to return to international laws," he said.

The transit duty is legally unfounded, Gref said. "Two steps must be taken before the negotiations begin - the duty must be repealed and the transit must continue," he said. "These preconditions are final. We will not start the negotiations until they are met," he said.

If Belarus does not do that, Russia "will seek alternatives when the amount of possible deliveries is assessed," Gref said. "In that case, we will consider a possible decrease of the output of Russian oil companies."

"This may be a very negative plan for Russia and Belarus," the minister said.

"We are working hard to prevent negative developments," he added.

On Tuesday Russian President Vladimir Putin instructed the Cabinet to continue the talks with Belarus and "to discuss with Russian companies the possibility of reducing the production of oil in connection with the problems which emerged in the transportation of oil via Belarus."

"It's necessary to secure the interests of Russian companies that have obviously encountered losses," Putin stressed adding that is was necessary to "consider compensation measures to minimize their losses."

The president also demanded "everything necessary should be done to secure the interests of western consumers" of Russian oil and asked the government to work out measures to protect the national economy.

Belarus started to siphon Europe-bound oil on January 6 and according to Transneft CEO Semyon Vainshtok, till January 9 managed take illegally some 79,000 tons of crude.

The European Commission is holding active consultations with Russia and Belarus for the soonest settlement of the oil crisis, commission spokesman Ferran Tarradellas Espuny said on Tuesday.

The European Commission views the oil crisis is a bilateral problem between Russia and Belarus. The spokesman urged both nations to find a mutually acceptable solution as soon as possible. That solution should provide for oil deliveries under EU agreements with Russia and Belarus, he said. The spokesman added that they would not interfere with the solution of bilateral problems.

He said one should not forget that Russia had been steadily supplying energy resources to Europe for 30 years. Regularly, Europe daily receives 8.1 million barrels of Russian oil through the Druzhba pipeline, which makes half of all Russian oil exports to EU clients.

All in all, 30% of European imported oil comes from Russia.

Source:

http://www.tass.ru/eng/level2.html?NewsID=11142604&PageNum=0