BELARUS NEWS AND ANALYSIS

DATE:

08/01/2010

Russia-Belarus oil talks collapse

MINSK, Belarus

A delegation from Belarus has left Moscow without reaching agreement with Russia in a dispute on oil duties, though officials on both sides played down the significance of the breakdown on Friday.

Russia is asking Belarus to pay full import duties on crude oil it refines and transits to the West, abolishing a current 65 percent discount. Experts estimate that equates to a $5 billion increase in costs for the poor former Soviet satellite, which buys about 20 million metric tons of Russian crude annually. Belarus consumes about a quarter and ships the rest onward in a lucrative cargo worth more than a third of the country's export revenues.

The stakes were raised earlier this week when Belarus threatened to cut off electricity to Russia's western exclave of Kaliningrad in apparent retaliation at the duty hike.

There have so far been no long interruptions in oil supply to Belarus, allaying fears of a repeat of last year's gas cutoff through Ukraine.

Irina Yesipova, a spokeswoman for Russia's Energy Ministry, on Friday confirmed to The Associated Press that two days of negotiations in Moscow had ended late Thursday but "will continue at a distance."

In Minsk, government spokesman Alexander Timoshenko told the AP that talks were continuing.

Neither disclosed the sticking points, but Belarus earlier accused Russia of "unprecendented pressure."

Belarusian economic analyst Yaroslav Romanchuk said Minsk would cede little ground in the dispute as Russia wouldn't want to risk appearing excessively overbearing.

Source:

http://www.businessweek.com/ap/financialnews/D9D3ILVO0.htm


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