BELARUS NEWS AND ANALYSIS

DATE:

22/01/2010

Russia still pumping oil to Belarus, volumes down

By Gleb Gorodyankin

MOSCOW, Jan 22 (Reuters) - Russian oil flows to Belarussian refineries continue but remain at well below normal levels, while oil transit to Europe via the Druzhba pipeline across the country is not affected, industry sources said on Friday.

An unresolved dispute over Russia's oil exports to its neighbour has led to Moscow imposing full export duties from Jan. 1 on most of its crude supplies to Belarus, which has sought continued preferential treatment and lower customs fees.

Transneft, Russia's oil pipeline monopoly, was scheduled to ship 1.05 million tonnes to Belarus in the first 21 day of January but actual supplies this month are much lower, at around 577,000 tonnes.

"There's not any official decision. We are pumping oil in compliance with orders issued by oil companies", a source at the pipeline operator said.

Transneft's initial first-quarter supply schedule showed that Russia was expected to ship up to 4.5 million tonnes of Urals blend crude oil to Belarus.

The firm has since told oil companies to re-route one third of Belarussian oil flows to the Polish port of Gdansk to avoid pipeline capacity losses.

Oil shipments from the Baltic port of Gdansk may reach up to 400,000 tonnes in January, oil traders said.

Russia allowed Belarus to import oil last year with only 35.6 percent of the current crude export tariff.

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

Russian oil export duty was set at $267 per tonne from Jan. 1.

TRADERS WORRIED

Oil negotiations between Moscow and Minsk were last held on Jan. 9. Russian officials have made no public comments since then.

Urals consumers along the Druzhba pipeline say they fear that any escalation of the dispute may affect transit supplies to Europe. The Belarussian spur of Druzhba carries about one-tenth of Europe's supplies from West Siberia.

"The silence is very suspicious. The market is waiting for an (official) statement. No matter whether it is good or bad news," an oil trader with a western major said.

"My personal opinion is that Belarussian side simply lacks funds to purchase crude at the full price (including full export duty)," another trader said.

Russia has repeatedly clashed with ex-Soviet states over energy pricing in recent years, prompting politicians from the European Union and the United States to accuse the Kremlin of using its energy might to bring its neighbours to heel.

Russia says it wants simply to bring energy prices and transit fees into line with the market after subsidising its neighbours for many years with preferential terms. Much of its oil and gas must cross Ukraine or Belarus to reach Europe. (Editing by Anthony Barker)

Source:

http://www.forexpros.com/news/forex-news/russia-still-pumping-oil-to-belarus,-volumes-down-114816


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