BELARUS NEWS AND ANALYSIS

DATE:

09/01/2007

Putin calls meeting on Russian-Belarus oil row

By Dmitry Zhdannikov

MOSCOW (Reuters) - Russian President Vladimir Putin will meet his officials on Tuesday to discuss steps to resume the country's pipeline oil flows to Europe, halted since Monday due to a trade spat with Belarus, industry sources said.

"There will be a meeting at the Kremlin at 12:30 (9:30 a.m. British time). There will be also talks with Belarussian officials, who have arrived in Moscow," an industry source told Reuters.

Belarussian government spokesman Alexander Timoshenko told Reuters deputy Prime Minister Andrei Kabyakov flew to Moscow on Tuesday for talks with Russian Economy Ministry officials.

Russia, the world's second largest oil exporter, has accused Belarus of stealing oil from Druzhba, a pipeline carrying two fifths of its total exports, and has shut off exports to five central European nations, including Poland and Germany.

The oil supply cut was reminiscent of a stand-off last year between Russia and Ukraine that hit gas supplies to Europe. It escalates a tit-for-tat dispute between Russia and longtime ally Belarus, which have imposed punitive oil levies on each other.

Europe is heavily reliant on Russia for its oil and gas and is vulnerable to Russian supply cuts.

The International Energy Agency said on Tuesday that European oil markets would cope with the halt of the 1.2 million barrels per day pipeline, one of the world's biggest, as the nations involved had working stocks of several days.

"Should disruption from the Druzhba pipeline prove more prolonged, each of the refineries could source crude supplies from alternative routes and some of them are already organising alternative supplies, be it through ports at the Baltic Sea or through pipelines coming from other sources," the IEA said.

The affected member countries of the IEA -- Germany, Hungary and the Czech Republic -- and its two applicant countries in the region -- Poland and Slovakia -- each have strategic reserves which could be drawn upon if the situation warrants, it said.

The IEA, energy adviser to 26 industrialised countries, said it wanted a quick resolution to the disruption.

The Czech Republic said on Tuesday it had already tapped a reserve of between 52,000 and 55,000 tonnes of crude oil stored in Slovakia, which would cover its needs for four days.

Belarus had until recently served as a loyal client state of Russia and the two countries have discussed launching a common currency as a precursor to creating a political union.

But Moscow's recent decisions to impose duties on oil sales to its neighbour, double gas prices and ban sugar imports have prompted President Alexander Lukashenko to turn against Moscow.

Lukashenko -- branded Europe's last dictator by the United States -- last week slapped a $45 per tonne transit fee on Russian oil pumped via Belarus. Russia ruled out any deal to resolve the crisis unless Belarus scraps its transit fee first.

Source:

http://today.reuters.co.uk/news/articlebusiness.aspx?type=businessNews&storyID=2007-01-09T092748Z_01_L09923878_RTRUKOC_0_UK-RUSSIA-PIPELINE.xml

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