BELARUS NEWS AND ANALYSIS

DATE:

18/01/2010

Transneft Reroutes 30% of Belarus' Oil

An unresolved dispute over Russian oil exports to Belarus escalated again with Moscow reducing flows to Belarussian refineries, traders said Friday, in a move likely to revive fears of supply disruptions to Europe.

Traders said Russian pipeline monopoly Transneft had told oil firms to reroute one-third of flows scheduled for Belarussian refineries to the Polish Baltic port of Gdansk, which is on the same pipeline as Belarus but further west.

Some traders said a few firms had already agreed to the order and would ship crude to Gdansk. Certain other firms had agreed to reduce supplies to Belarus but would seek destinations other than Gdansk for their oil.

Russia, the world's largest energy producer and Europe's top energy supplier, had briefly halted deliveries to the two refineries in Belarus, Naftan and Mozyr, after the two sides failed to clinch a deal by the New Year.

The suspension helped push oil prices to a 15-month high above $83 per barrel during the first days of this month. Flows restarted Jan. 3.

Germany, Poland and three other European countries that receive Russian oil supplies via the Druzhba pipeline can weather a potential disruption, the International Energy Agency said Friday.

"Although there is no imminent threat of tighter European crude supplies, given what is at stake for Belarus, a resolution may take some time to achieve," the IEA said in a report. The five European countries, which also include Hungary, the Czech Republic and Slovakia, have more than three months of emergency stocks and alternative supply routes, the IEA said.

"This is only going to get worse before it gets better," said Andrew Neff, senior analyst at IHS Global Insight, in Washington. "As long as transit volumes to Europe are not affected, this is just a bilateral trade dispute between Belarus and Russia."

The latest dispute centers on the tariffs that Belarus must pay for Russian oil. Moscow allowed Minsk to import oil last year at only 35.6 percent of the current crude export tariff.

Prime Minister Vladimir Putin has said Belarus can now buy 6 million metric tons of Russian oil, for domestic needs only, duty-free, while the remaining 14.5 million tons per year, which Belarus refines and re-exports to the West, should not be exempted from duties.

Putin's spokesman Dmitry Peskov said talks were continuing and added that Deputy Prime Minister Igor Sechin had sent a letter Friday to the Belarussian side explaining the Russian position. He declined to disclose the content of the letter.

"As before, the Russian side confirms its readiness to meet the demand from both the Belarussian side as well as European customers," he said, declining to comment on the latest cuts.

IHS Global Insight's Neff said he suspected that the solution could be found if Belarus agreed to cede a stake in the Naftan refinery to Russia.

(Reuters, Bloomberg)

Source:

http://www.themoscowtimes.com/business/article/transneft-reroutes-30-of-belarus-oil/397572.html


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