BELARUS NEWS AND ANALYSIS
DATE:
04/01/2010
Oil Flows to Belarus Restarted After Weekend Row
Russia has restarted oil supplies to refineries in Belarus, Deputy Prime Minister Igor Sechin was quoted as saying by Interfax news agency on Monday.
"We yesterday started shipments to Belarussian refineries," Sechin was quoted as saying. "We are continuing uninterrupted transit to Western European customers."
Prime Minister Vladimir Putin was quoted as saying he hoped to clinch a deal with Belarus over oil supplies in the near future.
Russia halted oil supplies to Belarussian refineries after failing to agree upon terms for 2010, traders said on Sunday, threatening a repeat of a dispute which disrupted supplies to elsewhere in Europe three years ago.
Deliveries to Belarus refineries were halted after talks broke down on New Year's Eve, two traders from major Russian oil firms told Reuters.
Talks on a new pricing structure for 2010 supplies restarted on Saturday and were continuing on Sunday, said Igor Dyomin, a spokesman for Russian pipeline monopoly Transneft.
European politicians have repeatedly accused the Kremlin of using its energy might as a tool of intimidation against its neighbors, be it gas or oil deals with Belarus or Ukraine.
Russia, the world's largest oil and gas producer, says it is simply switching gradually to market terms after subsidizing neighbors with cheap energy for years.
A fifth of Europe's gas comes from Russia via Ukraine and Belarus. Large volumes of Russian oil also go through pipelines that traverse the two ex-Soviet states.
Minsk has insisted that Russia supply duty-free oil not only for volumes consumed domestically in Belarus but for all Russian crude supplied to the country.
Most of that crude is refined by Belarussian companies Naftan and Mozyr for re-export to the West, and only a small portion of refined products stays inside Belarus.
Traders said Mozyr and Naftan have stockpiles of about 450,000 tonnes.
Belarus had threatened to raise the transit fee on Russian oil supplies to Poland and Germany tenfold to $45 per tonne in retaliation against Russian demands.
That would make transit supplies of crude expensive and potentially disrupt flows to Poland and Germany.
Russia and Belarus had plans to create a union with one currency and common customs rules, but the project never materialized as relations between the two states chilled.
Moscow has often blamed Lukashenko, who has been running the country for over a decade along Soviet-style command lines, for failing to keep its promises, including selling top assets to Russian firms.
Lukashenko in turn has accused Russia of deviating from initial agreements to create the union, including its efforts to raise oil duties.
Belarus gets some 400,000 barrels per day from Russia via the Druzhba pipeline, one of the world's biggest pipelines by length and capacity.
Druzhba's spur crossing Belarus supplies major refiners in Germany covering some 15 percent of the country's oil needs, while Poland relies on Druzhba for more than three-quarters of its consumption.
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