BELARUS NEWS AND ANALYSIS

DATE:

27/01/2010

Belarus, Russia End Oil-Supply Row

By JACOB GRONHOLT-PEDERSEN

MOSCOW--Russia has resolved an oil-supply dispute with neighboring Belarus, a government spokesman said Wednesday, easing concerns about midwinter disruptions of supplies to Europe.

"A deal has been reached, but we can't disclose any details yet," said Dmitry Peskov, spokesman for Russian Prime Minister Vladimir Putin.

Russia, the world's biggest oil producer, began reducing supplies through the Druzhba pipeline to Belarus's domestic market after a pricing deal between the two countries expired Dec. 31. The dispute, which has sparked fears about disruptions to oil flows through a pipeline system that supplies about 10% of the European Union's oil needs, helped push oil prices higher earlier this month.

Belarus's First Deputy Prime Minister Vladimir Semashko arrived in Moscow this week, after talks ended without result on Jan. 9.

The Druzhba pipeline carries about 37 million tons of crude annually through Belarus to refineries in Poland and eastern Germany, which depend on the pipeline for nearly all of their crude.

While transit through Belarus to European refineries has continued as normal, crude deliveries to the country's own two main refineries have fallen as supply contracts expired and new ones weren't being signed due to the absence of a pricing deal.

Until New Year's Eve, Moscow taxed the crude that the former Soviet republic refines domestically at about one-third the rate applied to other international customers.

In recent years, Belarus has annually used about eight million tons of oil domestically, while an additional 13.5 million tons every year were refined and re-exported at a hefty profit. But now Russia is demanding that Belarus pays full customs duties on the oil it doesn't consume domestically.

Source:

http://online.wsj.com/article/SB10001424052748704094304575029213715927370.html?mod=WSJ_latestheadlines


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