BELARUS NEWS AND ANALYSIS

DATE:

10/01/2007

Russia, Belarus talks yield no agreement on oil transit

MOSCOW, Jan 10 (Prime-Tass) -- Russian and Belarusian officials failed to resolve an escalating dispute over Russian oil transit through Belarus during talks held on Tuesday.

Following a meeting with Belarus' Deputy Prime Minister Andrei Kobyakov, Russia's Economic Development and Trade Minister German Gref commented that the "tone of negotiations" was "positive". He did not suggest any progress in the talks, however.

Gref and Kobyakov held the negotiations in Moscow at the Russian ministry late Tuesday.

On Monday, Belarus interrupted Russian oil deliveries to Europe via the Druzhba, or Friendship, pipeline before Russia's state-controlled oil pipeline monopoly Transneft stopped pumping its oil to Belarus as well.

The Druzhba oil pipeline delivers about half of Russia's oil supplies to the E.U. or about 12.5% of E.U. oil consumption.

Gref also said that Russia would look for alternative oil transit routes or increase oil refining if the dispute with Belarus was not resolved. If the capacity of the oil transit routes and refineries is insufficient Russia may have to cut its oil output, Gref added echoing similar remarks made by President Vladimir Putin on Tuesday.

Belarus seized some of the oil transited, claiming it was not properly cleared by its customs authorities following the introduction of a customs fee on transited oil, while Russia accused the former Soviet republic of stealing the oil.

The dispute stems from Belarus' imposing retroactively the U.S. $45 per tonne customs duty on Russian oil transited via the country effective January 1.

Russian officials said that the introduced customs duty violated bilateral agreements and prevalent international practices and Transneft has refused to pay the duty. Transited goods are not subject to export or import duties in most countries of the world.

Gref also said that Russia may retaliate for Belarus' introduction of the duty.

Belarus introduced the customs duty on Russian oil transit through its territory after Russia in December 2006 slapped a $180.7 per tonne duty on Russian oil exports to Belarus, which enjoyed duty-free supplies and benefited from refining Russian crude and subsequently exporting oil products.

Meanwhile, Alexander Timoshenko, chief spokesman for Belarusian Prime Minister Sergei Sidorsky said Wednesday that Sidorsky may visit Russia for talks on oil transit. He did not give any timelines, ITAR-TASS reported.

The conflict between Russia and Belarus comes on the heels of a months-long dispute over the price of Russian natural gas exports to Belarus. In late December, Russia and Belarus reached a deal under which the price of Russian gas supplies and the price Russia pays for gas transit via Belarus were hiked. The Belarusian government also agreed to sell a 50% stake in Belarus' gas pipeline monopoly Beltransgaz to Russia's natural gas monopoly Gazprom.

Source:

http://www.prime-tass.com/news/show.asp?topicid=0&id=412797