BELARUS NEWS AND ANALYSIS

DATE:

28/01/2010

Russia and Belarus settle oil supply spat

By Isabel Gorst in Moscow

Russia has settled a spat with Belarus about oil supplies and transit that had threatened to increase the price of oil it delivers to Europe.

The two countries have been locked in a dispute since last month over the export duties Belarus pays Russia for oil supplies and the transit fees it charges for transporting Russian oil exports through its pipelines to Europe.

Belarus had threatened to raise oil transit fees if Russia went ahead with a plan to increase export duties.

Igor Sechin, Russia's deputy prime minister and Vladimir Semashko, Belarus' first deputy prime minister, signed a package of agreements on Wednesday settling the dispute.

Mr Sechin said Russia would allow Belarus to continue paying a favourable tax rate on oil supplied for its domestic needs in 2010. It was not clear how much tax Belarus will pay on oil it re-exports after processing in its own refineries.

The two men also signed an agreement guaranteeing the stable transit of Russian oil through Belarussian pipelines to Europe this year.

Talks between the two sides have repeatedly broken down during the past month leading to a brief interruption in Russian oil deliveries to Belarussian refineries early this year that contributed to a rise in oil prices.

Russia has repeatedly clashed with its neighbours over oil prices and transit as it moves to end preferential energy trading terms that date back to the Soviet era.

Europe, mindful of disputes that have disrupted Russian oil and gas supplies in the past three years, is eager for former Soviet countries to resolve their differences.

Russia has launched a series of oil and gas pipeline projects to eliminate its dependence on Ukrainian and Belarussian transit routes.

It has also sought to gain control over pipelines and refineries in the two countries to enhance the security of energy supply.

Welcoming the deal, Mr Sechin said Russian officials had given up their New Year holidays to negotiate the settlement with Belarus.

"Belarus' position was very tough for us," he said in a statement posted on the government website. "We agreed a series of compromises taking into account our special relationship with the brother republic and with the people of Belarus."

Talks between the two sides about co-operation in gas and atomic energy are to continue in the coming weeks.

Separately, Russia, Belarus and Kazakhstan are finalizing plans to form a joint customs union in July this year that will pave the way for the creation of a single economic space with uniform tariffs.

Lukoil, one of Belarus' biggest oil suppliers, said the agreement was "positive", ending uncertainty about oil transit across Belarus in the coming year.

Source:

http://www.ft.com/cms/s/0/c3b46364-0c14-11df-96b9-00144feabdc0.html


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