BELARUS NEWS AND ANALYSIS

DATE:

09/01/2007

Merkel Pushes Putin to End Russia-Belarus Oil Impasse (Update1)

By James G. Neuger

Jan. 9 (Bloomberg) -- German Chancellor Angela Merkel prodded Russian President Vladimir Putin to end the cutoff of European oil supplies triggered by Russia's pricing clash with neighboring Belarus.

In an echo of last year's Russian embargo of natural gas shipments to Ukraine, Russia stopped pumping crude oil through Belarus after the Belarusian government imposed a transit tax in retaliation against a Russian price increase.

``Even during the Cold war, Russia was a stable energy supplier,'' Merkel, holder of the European Union's six-month presidency, said at a Berlin press conference today. She called Russia's failure to consult the EU ahead of time ``not acceptable.''

Merkel, who grew up under Soviet dominion in East Germany, is steering the EU toward a harder line on Russia than her predecessor Gerhard Schroeder, who now chairs a German-Russian gas pipeline project that he negotiated as chancellor.

The message ``to our Russian partners and to Belarus as well is that consultations are the least thing to do,'' Merkel said. ``It is not acceptable if there is no consultation on such issues. That destroys confidence and this is no basis for smoothly building up a constructive relationship.''

Russian Supplies

Slovakia, the Czech Republic and Hungary were cut off from Russian oil deliveries today, after flows to Poland and Germany were disrupted yesterday. Russia supplies a quarter of the EU's oil.

Russian pipeline operator OAO Transneft said Belarus had siphoned 79,000 tons of crude from the pipeline leading westwards, the source of 12.5 percent of the EU's oil imports, according to the European Commission.

Pinning the blame for the crisis on the Belarusian leadership, Putin today urged his government to continue talks to break the impasse and ``defend'' western Europe's energy consumers, according to the Kremlin's Web site.

Putin last year tightened his grip on energy production, starting with the Ukraine gas blockade in January and culminating in a December decision that forced Royal Dutch Shell Plc to give up control of the Sakhalin-2 oil and gas project to Russia's OAO Gazprom.

Energy Policy

This week's clash with Belarus ``is another demonstration, if it was necessary, that we need a common energy policy,'' Commission President Jose Barroso told the press conference. The commission will outline an energy strategy tomorrow.

Managers of the strategic oil reserves in the 27 EU countries meet Jan. 11 in Brussels to ``explore measures in case there is any shortage of oil products,'' a commission spokesman, Ferran Tarradellas Espuny, said today in Brussels.

Strategic oil reserves in Germany, the EU's largest economy, cover 123 days of demand, Tarradellas Espuny said.

Source:

http://www.bloomberg.com/apps/news?pid=20601100&sid=ag2XoThK8m5w&refer=germany