BELARUS NEWS AND ANALYSIS

DATE:

13/01/2007

Russia, Belarus reach 'balanced' energy agreement - opinion

MOSCOW, January 13 (RIA Novosti) - Russia made concessions to Belarus at their oil talks this week, but the agreement they reached is beneficial for both ex-Soviet states, a Russian official close to the negotiations said Saturday.

After two days of negotiations, Russia and Belarus initialed Friday an agreement settling their dispute over oil supplies, with Russia reducing the oil export duty for its neighbor from $180.7 to $53 per metric ton, effective from January 1, 2007.

The new oil export duty ends horse-trading between the two former allies, which disrupted Russian crude supplies to Europe and tarnished Russia's reputation as a reliable energy supplier.

Russia made some concessions as it "was not after putting Belarus on its knees," he said, adding the two countries had reached "a balanced agreement." He said the agreement, which also lifts other trade barriers, was to be signed in the next two weeks.

Russia ended duty-free oil supplies to Belarus delivering a major blow on the economy of a country that has relied heavily on receipts from refining and re-exporting Russian oil.

Oil product exports account for 50% of Belarus's export revenues totaling $15 billion a year.

Starting from 2007, Russia also canceled a preferential price for natural gas supplies to Belarus, with which it is building a union state, doubling it to $100 per 1,000 cu m, in line with its drive to gradually bring gas prices for former Soviet satellites closer to European levels.

"We did not drive our [Belarusian] partners into a corner, but gave them an opportunity to increase payments [oil duties] gradually," the official said.

The two countries agreed that Russia would receive 70% compensation from Belarus's exports of refined Russian oil in 2007, 80% in 2008 and 85% in 2009, Russia's Prime Minister Mikhail Fradkov said Friday.

The official praised the deal saying it ensured uninterrupted supplies to Europe in the short term, but added other export routes needed to be explored.

The three-day stoppage of supplies over Belarus's tapping of Europe-bound oil pumped along Russia's main export pipeline Druzhba (Friendship) affected Poland, Germany and other European countries and fueled accusations of bullying policies and blackmail against Russia.

Belarus started siphoning off oil when Russia refused to pay a transit fee the republic imposed in retaliation for the Russian export duty. But Minsk later lifted the tax, opening the way to the resumption of supplies and the start of talks with Moscow.

The Russian official said a Belarusian delegation would come to Moscow again next week for talks on sugar supplies to Russia, the issue that was not mentioned at the talks this week.

The Russians threatened duties on Belarusian goods, when Minsk imposed the oil transit fee.

Source:

http://en.rian.ru/russia/20070113/59012432.html