BELARUS NEWS AND ANALYSIS

DATE:

10/01/2007

Belarus President Says Deal Struck With Russia on Oil (Update2)

By Lucian Kim

Jan. 10 (Bloomberg) -- Russia and Belarus agreed to end a dispute over oil duties that led to the closing of Russia's main export pipeline to Europe, Belarusian President Alexander Lukashenko said on his Web site.

Lukashenko and Russian President Vladimir Putin agreed to break the deadlock during a telephone conversation today, according to the Web site. Officials from both countries will submit draft proposals to the presidents for review on Jan. 12.

A Kremlin press official said he couldn't confirm that a deal had been struck, when reached by telephone in Moscow. The Kremlin later issued a one-sentence statement saying only that Lukashenko initiated the call and that the two leaders discussed ``problems of the transit of Russian oil.''

Russia shut down its Druzhba pipeline through Belarus on Jan. 8, accusing its former Soviet partner of stealing crude in retaliation for a new export tax on supplies to Belarus. Belarus in turn said it would charge a transit fee on the 1.4 million barrels a day flowing through the pipeline, equal to 15 percent of Russia's total output.

The shutoff led to a cut in supplies to refineries across central Europe, including Germany, Poland, Slovakia and Hungary, forcing those countries to tap stockpiles and renewing concern about dependency on Russian energy. Russia supplies a quarter of the European Union's natural gas, flows that were curtailed during a similar transit dispute with Ukraine a year ago.

German Demand

German Foreign Minister Frank-Walter Steinmeier phoned Deputy Russian Prime Minister Dmitry Medvedev today to demand a ``quick solution'' to the impasse. Germany, the biggest buyer of Russian gas, took over the rotating EU presidency Jan. 1. Medvedev, Putin's former chief of staff, is also chairman of OAO Gazprom, Russia's gas-export monopoly.

``The supply of Russian oil to Europe must be reinstated,'' Steinmeier said, according to a statement on Germany's EU presidency Web site. ``The oil dispute between Russia and Belarus must not be conducted at the expense of third parties.''

German Chancellor Angela Merkel said yesterday it was ``not acceptable'' that Russia hadn't consulted the EU about the shutoff. She is scheduled to visit Moscow on Jan. 21.

Source:

http://www.bloomberg.com/apps/news?pid=20601085&sid=aqCu2A9zbEQY&refer=europe

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