BELARUS NEWS AND ANALYSIS
DATE:
25/01/2011
Russia starts pumping as Belarus oil row ends
By Olesya Astakhova and Andrei Makhovsky
MOSCOW/MINSK, Jan 25 (Reuters) - Russia started pumping crude oil to Belarus refineries for the first time in 2011 after a halt that hit European fuel supplies and raised fears of a political row that could leave Europe short of Russian crude.
A spokesman for Russia's state oil pipeline monopoly, Transneft, said the oil began to flow toward Belarus at 17:50 Moscow time (1450 GMT). A spokeswoman for the Belarus refinery operator said new supply deals were signed.
"Agreements on crude oil delivery have been concluded between Belarusian refineries and Russian oil companies," Belneftekhim spokeswoman Marina Kostyuchenko said.
Two refineries provide Belarus and its struggling economy -- heavily dependent on cut-price energy supplies from Moscow -- with crucial export revenue from motor fuel sales to Europe.
By Monday, the country's two refineries, with a total capacity of 360,000 barrels per day, were left with only one week's worth of oil stocks.
The halt also forced Russia to send more crude into European markets, in particular to the Baltic port of Gdansk, putting pressure on oil prices in Europe. At the same time, exports of diesel from Belarus dried up.
But Russian crude customers further down the Soviet-built Druzhba (Friendship) pipeline, which passes through Belarus, continued to receive shipments as normal, and Moscow and Minsk were at pains to emphasise their problems were technical.
In past years, political tensions between Moscow and Minsk over energy supplies have hit deliveries to Europe via pipelines that cross Belarusian territory.
The depth of the pricing disagreement was highlighted last week when a meeting between Russian Prime Minister Vladimir Putin and his Belarusian counterpart yielded no tangible results, despite a recent thaw in relations between Moscow and Minsk.
The Kremlin silently approved last month's presidential elections in Belarus, which were described as "rigged" by Western observers and won by longstanding President Alexander Lukashenko.
But talks over Russian oil prices -- as Moscow dropped export duties for Belarus-bound oil after the creation of a free-trade zone -- remained deadlocked.
Moscow and Minsk have agreed on an oil price formula, trading sources told Reuters, saying Russia will supply around 350,000-400,000 tons of oil in January, or a quarter of the usual monthly delivery volumes.
Belarus stopped receiving Russian Urals crude deliveries for its refineries on Jan. 1. Its stocks had been due to run out by the end of the month.
Market sources told Reuters earlier that Russian companies wanted a $45 per tonne price rise, particularly given that Belarus will increase transit tariffs by 12.5 percent from Feb. 1.
"The conditions for Russian companies could not be worse," one trader said, without elaboration.
Russia, among the world's top oil and gas producers, has had regular energy price disputes with neighbours Ukraine and Belarus, which control the main transit routes to Europe since the Soviet Union collapsed. In the past, such disputes have affected onward supplies to Europe. (Writing by Melissa Akin and Katya Golubkova; Editing by Jason Neely and Jane Baird)
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