BELARUS NEWS AND ANALYSIS

DATE:

12/01/2007

Russia, Belarus hold more negotiations

MOSCOW

Russian and Belarusian officials held more tense negotiations Friday in an effort to end the trade dispute that triggered a three-day shut-off of a main Russian oil pipeline to Europe.

Russian Prime Minister Mikhail Fradkov and his Belarusian counterpart, Sergei Sidorsky, met on Friday for a second day of talks, along with the heads of Russia's finance, economy and energy ministries and the head of Russian national pipeline monopoly OAO Transneft.

The dispute centers on Russia's imposition of a heavy export duty on oil shipped to Belarus. In response, Belarus levied a transit fee on Russian oil going to European customers via a pipeline crossing Belarus.

On Monday, Russia shut off the flow, claiming that Belarus had siphoned off some 80,000 tons of oil as payment for the transit fee.

Belarus on Wednesday lifted the transit fee and the oil flow resumed, but it remains unclear whether Russia is willing to lift or reduce its duty on oil destined for Belarus; the bilateral talks are aimed at resolving the dispute.

Belarus' largely centralized Soviet-style economy depends on cheap Russian energy supplies. But Russia is moving to end its longtime practice of selling energy at discounted prices to ex-Soviet states. This year, Russia forced Belarus to pay more than double its previous rate for natural gas imports.

The oil cutoff raised new concerns among European countries about their heavy reliance on Russian energy exports.

German Foreign Minister Frank-Walter Steinmeier, whose country holds the rotating EU presidency, said after the oil was turned on again that "we would now like to open a dialogue with Russia in order to establish our future energy relations on a reliable, enduring basis."

Source:

http://www.businessweek.com/ap/financialnews/D8MJQHRO0.htm