Russia, Belarus agree on gas prices, still differ on oil

Russia will supply Belarus with gas at current contract prices, but is ready to consider offering subsidies if necessary, Russian Prime Minister Vladimir Putin said on 20 Janauary following talks with his Belarusian counterpart Mikhail Myasnikovich.

"The Russian side has once again confirmed that it will supply gas at the current contract prices which are in effect until the end of the current year... We are ready to study state support measures from Russia so that gas supplies do not become burdensome for Belarus companies and the budget," Ria Novosti quoted Putin as saying.

But Putin and Myasnikovich failed to resolve the oil transit dispute during their meeting in Moscow. However, Russia's crude supply to Belarus may resume this week after being halted on 1 January in a pricing row, Belarussian state-run news agency BelTA reported, citing a source in a delegation that held talks in Moscow on 20 January. Minsk earlier said "a number of pressing issues" were on the agenda, including oil deliveries and the price of natural gas in 2011, Russian news agency Itar-tass reported. Russian oil companies halted oil shipments to Belarus at the beginning of the year until new contracts are signed between the two countries. Russia halted oil supplies to Belarus refineries on 1 January due to a pricing agreement, which traders claimed had also resulted in Minsk suspending diesel exports to Europe. "After the talks with Vladimir (Putin), we ordered our deputy prime ministers, ministers, to ... resolve the outstanding issues of the fuel energy complex in coming days," Myasnikovich said after the meeting. Russia sends most of its oil through the Druzhba pipeline across Belarus. Moscow is looking for alternative transit networks to avoid political sensitive issues with transit nations but hasn't indicated energy supplies to its European consumers are affected.

Russia used to sell oil to Minsk at a steep discount, but in recent years has sought to bring the price more in line with market rates. At the same time Belarus has also been lifting the transit fee it charges Moscow to carry its crude to European markets. The persistent pricing dispute has played out against a background of souring relations between the two neighbors, with Moscow irritated by Minsk's overtures to the West to secure an easing of sanctions over longtime President Alexander Lukashenko's record on human rights and democracy.

Moscow put pressure on Lukashenko last year with tough criticism but shortly before the election agreed to drop duties on oil exports to Belarus to keep its influence. Belarus exports about 2.4 million tons of diesel per year, mainly to northern Europe. The volumes amount to less than one per cent of Europe's overall diesel consumption but for Germany alone it represents about 8%, according to figures from the Daily Times.

Putin's talks came a day before Lukashenko's inauguration to a new five-year term after a December election. Russia's largest crude producer, Rosneft, said he didn't expect a significant breach over the dispute. "I don't expect a major crisis with Belarus," Reuters quoted Rosneft Vice President of Peter O'Brien as saying when asked about discussions over Russian oil supply. He declined to elaborate on price talks between the producer and Belarusian buyers.

"The transit via Belarus continues, though refineries in Belarus are not getting Russian oil for now," Reuters quoted Igor Dyomin, spokesman for Russian oil pipeline monopoly Transneft, as saying on 18 January.

Russian firms want a $45 per ton price rise as Belarus will increase transit tariffs by 12.5% from 1 February and crude oil prices on world markets have hit two-year highs.


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