BELARUS NEWS AND ANALYSIS

DATE:

10/01/2010

Russia, Belarus fail to agree on oil supplies

"Belarusian and Russian delegations again failed to reach a compromise and to agree on the terms of oil supplies to Belarus"

Russia and Belarus have failed to agree on Russian oil supplies to the ex-Soviet state, but are willing to continue negotiations, a spokesman for the Belarusian President has said.

Belarus benefited from significant discounts on Russian oil imports in 2009, and is again seeking preferential treatment this year. Russia says it is willing to eliminate all duties on oil supplied to Belarus for domestic consumption, but wants oil bound for European markets to be subject to duty. Russia has warned Belarus that it will have to pay full duty on all oil delivered while no agreement is in place.

"Belarusian and Russian delegations again failed to reach a compromise and to agree on the terms of oil supplies to Belarus," Alexander Timoshenko said.

The delegations of Russia and Belarus met on Saturday in the Russian government.

A source in the Russian president's administration said Dmitry Medvedev offered to supply duty-free some 6.3 million metric tons of oil for domestic consumption during the December 10 meeting with his Belarusian counterpart, Alexander Lukashenko. Belarus, however, requested Russia to supply up to 30 million metric tons of oil duty free, saying it would otherwise increase transit fees for Europe-bound oil from $3.9 to $45.

Russia exported around 25 million tons of oil to Belarus last year, but only 5-6 million tons were for domestic consumption. The rest was re-exported, some after passing through one of the country's two oil refineries.

A leading Russian expert in oil industry said Belarus would receive an annual profit of $1.8 billion from Russian oil supplies.

"Russia said it was set to further subsidize Belarusian economy be sending it 6.3 million [metric] tons of oil. Based on the current export duty of $267 per metric ton, would bring Minsk $1.8 million in profit annually," the expert, who spoke on the condition of anonymity, said.

Belarus has lowered its crude oil export duty from $271 to $267 per metric ton from January 1.

The dispute between Moscow and Minsk has raised fears in Germany and Poland that supplies may be affected, as they were during a similar dispute in 2007, but so far there have been no disruptions to oil transit via Belarus, and deliveries are occurring to both Belarus's oil refineries.

Source:

http://en.rian.ru/exsoviet/20100110/157503001.html


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