BELARUS NEWS AND ANALYSIS

DATE:

09/01/2007

Russia's Transneft sues Belarus - energy minister

MOSCOW, January 9 (RIA Novosti) - Russian pipeline monopoly Transneft [RTS: TRNF] filed law suits Tuesday against Belarus, which Moscow accuses of tapping Europe-bound oil, the industry and energy minister said Tuesday.

Transneft said Monday it was forced to halt crude supplies via its western neighbor because Belarus had been siphoning off Russian oil designated for Europe from the Druzhba pipeline.

"Transneft filed relevant law suits this morning," Viktor Khristenko said without specifying how many suits were filed, or with which court.

The minister said Belarus had siphoned off around 80,000 metric tons of oil as of Sunday morning, when supplies were halted.

He said other transit countries and consumers might also sue the ex-Soviet state, but admitted that this would not go a long way toward resolving the energy dispute.

Relations between Russia and Belarus have been strained since Moscow doubled the price for natural gas it supplies to its ex-Soviet neighbor to $100 per 1,000 cubic meters as of January 1, and imposed an oil export duty of $180.7 per metric ton. Belarus, whose economy was likely to be hard hit by the charges, responded January 3 by introducing a transit duty of $45 per metric ton for crude passing through its territory.

Russian officials do not recognize the levy as legitimate, saying it contradicts intergovernmental accords.

Discussing options to safeguard supplies to European consumers, Khristenko said Russia would increase direct oil supplies through the Baltic region from the current 74 million metric tons to 110 million tons per year (2.2 million bbl/d) in the next two to three years.

The minister also said Russia could boost rail and river transit to maintain oil supplies to Europe.

"We may start using alternative means of transportation for the short-term. We may increase crude supplies by rail and river to our European customers," he said.

Druzhba, one of the world's largest pipelines, passes through European Russia to Belarus, where it divides into two branches. The northern branch supplies Poland and Germany, and the southern route passes through Ukraine, to Hungary, the Czech Republic, and Slovakia.

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

Khristenko said Russia might be forced to cut oil output due to the transit risks, echoing President Vladimir Putin's instructions to the government earlier Tuesday.

"If all the measures and actions we have outlined prove insufficient, we could resort to reducing oil production," the minister said.

Belarusian Deputy Prime Minister Andrei Kobyakov is currently in Moscow negotiating a solution to the row between the former Soviet allies, which are building a new political union.

Source:

http://en.rian.ru/russia/20070109/58749090.html

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