BELARUS NEWS AND ANALYSIS

DATE:

09/01/2007

Putin orders govt. to meet interests of Western energy consumers

MOSCOW, January 9 (RIA Novosti) - Russia's president ordered the government Tuesday to protect the interests of Western energy consumers amid an ongoing standoff with Belarus over oil transit to Europe.

"Every effort must be made to protect the interests of Western consumers," Vladimir Putin told a Cabinet meeting.

Poland and Germany, which receive Russian oil via Belarus, said Monday that Russian oil supplies passing through the Druzhba (Friendship) pipeline to European customers had been disrupted. Russia's pipeline monopoly Transneft blamed Belarus for blocking European exports and siphoning Russian oil.

Russia doubled the price for natural gas it supplies to Belarus to $100 per 1,000 cubic meters from January 1, and also imposed an oil export duty of $180.7 per metric ton for its ex-Soviet neighbor. Belarus responded January 3 by imposing a punitive oil transit levy of $45 per metric ton.

Russia's economics minister German Gref told the meeting that the duty being charged by Belarus is neither an import nor an export duty, but rather a payment invented by the country. He called the levy unprecedented, and said it contradicts intergovernmental agreements.

Finance Minister Alexei Kudrin said the new oil export duty Russia is charging Belarus is set to bring around $4 billion to the Russian budget, which has lost between $3.5 billion and $4 billion annually over the last five years.

"Earlier, we were unable to receive the funds because of the need to pursue integration processes [with Belarus]," Alexei Kudrin said.

President Putin said the government should "discuss with Russian companies the possibility of reducing oil production."

Russia currently exports some 20% of its crude via the Druzhba pipeline to Europe, and the loss of that route could leave Russia with an oil surplus.

"We should continue talks with our Belarusian partners in order to resolve our oil supplies to Belarus and transit via Belarus. We must protect the interests of Russian companies, which may face certain problems, and should consider measures to minimize their losses," Putin said.

At a joint news conference in Berlin earlier Tuesday, German Chancellor Angela Merkel and European Commission President Jose Manuel Barroso voiced their concerns over the supply disruption, which has also affected Hungary, the Czech Republic and Slovakia, but expressed confidence in Russia as a reliable supplier. Merkel said Russia and its predecessor, the Soviet Union, always provided stable supplies, even during the Cold War.

EU Energy Commissioner Andris Piebalgs called on Moscow and Minsk to find a swift and mutually acceptable solution to the oil dispute, and to restore crude supplies to the European Union immediately.

Belarusian Vice Premier Andrei Kobyakov is holding talks in Moscow aimed at finding a solution to the row between the countries, which are building a Union State.

Source:

http://en.rian.ru/russia/20070109/58738886.html