BELARUS NEWS AND ANALYSIS

DATE:

11/01/2007

Russia restarts pipeline oil flow to Belarus

MOSCOW/MINSK, Jan 11 (Reuters) - Russia restarted the flow of oil through its main oil export pipeline on Thursday after Belarus dropped an oil transit duty imposed last week and agreed to return oil Moscow said it had taken illegally.

"Belarus has fully returned 79,000 tonnes of oil. Transneft started to pump oil in the direction of Belarus at 8:22 a.m. Moscow time (0522 GMT). The Druzhba pipeline is working normally," Sergei Grigoryev, vice-president of Russian pipeline monopoly Transneft, told Reuters.

Russia, the world's second biggest oil exporter, had closed the Druzhba ("Friendship") pipeline, its largest single oil export route, for more than 60 hours, cutting European Union oil supplies by around 1.5 million barrels of oil per day.

The shutdown marked the climax of a trade dispute in which Moscow doubled gas export prices to Belarus at the New Year and imposed a crippling crude oil export duty equivalent to 10 percent of the gross domestic product of its western neighbour.

Belarus, once Moscow's most loyal ally, responded by slapping the oil transit duty of $45 per tonne on Russian oil piped across its territory, effective from Jan. 1.

Transneft said it shut the pipeline when Belarus began siphoning off oil to take payment of the levy in kind, and only agreed to restart the pumps after the missing oil was returned.

Oil firms in Hungary and Poland confirmed on Thursday that volumes through the pipeline had returned to normal. Belarus said it resumed pipeline operations late on Wednesday evening, enabling Russia to turn on the taps.

Belarussian Prime Minister Sergei Sidorsky will hold talks with Russian counterpart Mikhail Fradkov on Thursday. Sidorsky said on Wednesday he expected Russia to lift its own trade restrictions on Belarus.

"The prime minister has left for Moscow. The aim of the trip was indicated yesterday," Sidorsky's spokesman said on Thursday.

During the dispute Russia also banned sugar imports from Belarus, which normally sells half its annual production of around 770,000 tonnes to Russia.

Source:

http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2007-01-11T075732Z_01_L11544824_RTRIDST_0_RUSSIA-PIPELINE.XML&rpc=66&type=qcna

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