BELARUS NEWS AND ANALYSIS

DATE:

11/01/2007

Russia Resumes Oil Shipments to Europe

Moscow on Thursday reopened the Druzhba pipeline, which delivers crude oil from Russia to Central Europe via Belarus. Still, doubts about Russia's reliability as an energy supplier remain.

The Druzhba oil pipeline, connecting Russia with Germany and Central Europe, is open once again. Following a three-day suspension of supplies, the Russian operator of the pipeline said that oil began flowing again at about 8:30 a.m. on Thursday.

The resumption of crude oil to Europe via Belarus comes a day after Moscow and Minsk reached an agreement in the tiff which had led to the pipeline's closure. As part of that agreement, Belarus on Wednesday had begun pumping oil to compensate Russia for some 79,000 metric tons (87,000 tons) of oil siphoned off of the Druzhba ("Friendship") pipeline.

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

European concerns about the reliability of Russia as an energy supplier were heightened by the pipeline closure. One year ago, a dispute with Ukraine over natural gas prices led to an interruption of supplies to a number of European countries.

"The disruptions in oil supplies have yet again undermined Russia's efforts to establish itself as a reliable source of fuel supplies to Europe," analysts at Deutsche UFG, a Deutsche Bank investment group, wrote in a note to investors according to AP.

Moscow cut off the supplies as a result of a dispute over oil duties with Minsk. Last month, Russia imposed a tax of $180 per ton on oil exports to Belarus complaining that the country had been profiting from cheaper deliveries by refining Russian oil and selling it at a hefty mark-up. Belarus responded by slapping a $45 per ton tax on Russian oil transported through Belarus -- which meant all the oil flowing through the Druzhba pipeline, one of the biggest in the world.

Russia shut down the pipeline on Monday after Belarus began siphoning off oil out of the pipeline to compensate itself for the duties imposed by Moscow. On Wednesday, the two sides reached an agreement in the dispute.

European worry about Russia's reliability as an energy supplier had already been high. Moscow has raised gas prices to a number of former Soviet states in recent years leaving the impression that it was using fuel prices as a foreign policy tool. In December, Russia more than doubled the price Belarus has to pay for natural gas to $100 per 1,000 cubic meters not long after Belarus began distancing itself from a proposal to reunite with Russia.

Source:

http://www.spiegel.de/international/0,1518,459053,00.html