BELARUS NEWS AND ANALYSIS

DATE:

04/01/2010

Russia resumes oil supply to Belarus refineries

* Tensions still simmering in a dispute over oil deliveries between world's biggest energy producer and its ex-Soviet neighbour

MINSK: Russia said on Monday it had resumed supplies to refineries in Belarus, but tensions are still simmering in a dispute over oil deliveries between the world's biggest energy producer and its ex-Soviet neighbour.

Russian Deputy Prime Minister Igor Sechin said on Monday: "We yesterday started shipments to Belarussian refineries", Interfax news agency quoted him as saying. After meeting Sechin, Prime Minister Vladimir Putin said he hoped to clinch a deal with Belarus over oil supplies sometime soon, Interfax added. But Minsk earlier on Monday warned it may cut electricity supplies to Russia, racheting up tensions in the dispute between the two ex-Soviet countries, which broke out on New Year's Eve. That has raised the spectre of another winter of supply disruptions for European Union customers such as Germany which buys 15 percent of its oil from Belarus's arm of the Druzhba pipeline.

In a sign tensions were rising, Belarus's state power company said the lack of a proper agreement governing electricity supplies meant it might have to be cut to the Russian enclave of Kaliningrad on the Baltic Sea.

"The Belarussian side will be forced to stop the unsanctioned commercial transit of electricity across the Belarussian grid which could threaten supplies to customers in Kaliningrad," a unit of Belenergo said in a statement. A spokesman for Belenergo refused further comment. Russia, the world's largest oil and gas producer, has repeatedly clashed with its neighbours, particularly Ukraine, over Soviet-style subsidised energy prices, though several winters of supply disruptions have also strained ties with the European Union, Moscow's biggest trading partner. Now the focus has shifted to Belarus, which is in a dispute with Moscow over how much export duty it should pay to Russia for supplies which were then refined and exported to the West, a pillar for the $50 billion Belarussian economy. Politicians in the European Union and the United States have repeatedly accused Russia of using its vast energy resources to bring its neighbours to heel, though Moscow says it is simply trying to bring market pricing for its energy supplies.

EU supplies: Concern over EU energy supplies in the run up to New Year - the traditional end of energy contracts in the former Soviet Union - had focused on Ukraine, over which Russia pumps one fifth of European Union gas supplies. But a repeat of the nearly two-week gas supply disruption was avoided when the International Monetary Fund (IMF) relaxed conditions in December for a multi-billion dollar bailout to Ukraine, allowing Kiev to pay its gas bill. Negotiators from Belarus and Russia were holding talks in Moscow on Monday about the situation, sources said. Minsk insisted Russia supply duty-free oil not only for volumes consumed domestically in Belarus, but for all Russian crude supplied to the country, which Belarus then pumps out to Europe.

Most of that crude is refined by the Naftan and Mozyr refineries for re-export to the West and only a small portion of refined products actually stay within Belarus. A spokeswoman for Belarus state oil company Belneftekhim said Russian crude was flowing normally through the Druzhba pipeline and that the refineries were working normally. Traders said Mozyr and Naftan had enough stockpiled crude to continue operations for around a week. In 2008, Germany received around 350,000 barrels per day (bpd) of crude via Druzhba, or just under 15 percent of its total consumption. Refineries belonging to Total, Shell and BP are among the biggest buyers of crude from Druzhba. Poland imports around 400,000 bpd of crude via Druzhba for domestic refining, or more than three-quarters of its consumption, and exported another 90,000 bpd of Druzhba crude via the Baltic Sea port of Gdansk. reuters

Source:

http://www.dailytimes.com.pk/default.asp?page=2010\01\05\story_5-1-2010_pg5_41


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