Russia, Belarus PMs fail to agree oil export terms

MOSCOW, Dec 8 (Reuters) - Russia's Prime Minister Vladimir Putin and his Belarussian counterpart Sergei Sidorsky failed to reach an agreement on oil export terms on Wednesday, raising the possibility of a new energy dispute between Minsk and Moscow.

A source close to the talks described them as "a complete failure". In June, Minsk threatened to cut Russian gas transit to Europe in a pricing dispute, and this time it is oil which is causing tensions.

"It was not possible to reach agreement on all levels," Putin's spokesman Dmitry Peskov said after Wednesday's talks.

A planned press briefing was cancelled and no statement issued after the meeting, at the start of which Putin had said he was "very much counting" on all the issues being resolved.

Rows over pricing and other issues between the Kremlin and both Ukraine and Belarus, through which pipelines take Russian oil and gas exports to Europe, have led in recent years to disruption of vital supplies to European Union countries.

The dispute centres around export duties, which are set to be scrapped between Russia, Belarus and Kazakhstan as part of a recently-formed Customs Union.

Moscow says any oil produced by Belarus should be used to meet domestic needs, while any spare oil bought from Russia can be processed by Minsk and sold abroad at the Russian export duty rate, with the tax revenues then going into the Russian budget.

"Belarus produces 1.7 million tonnes a year, they want to sell this oil duty-free and take all their money into their budget," the source said.

Russia has delayed setting its own export duties on oil products -- a key expense for companies -- for 2011, awaiting the resolution of the Belarus issue. (Reporting by Darya Korsunskaya; writing by Toni Vorobyova, editing by Anthony Barker)


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