BELARUS NEWS AND ANALYSIS

DATE:

16/02/2007

Ukraine, Lithuania, Belarus to Establish Alternative to Russian Oil Supplies

MosNews

Ukraine, Lithuania and Belarus said that they will establish an oil supply system that will serve as an alternative to Russian energy supplies to secure soft landing in case Moscow cuts deliveries.

The initiative came from the Lithuanian President Valdas Adamkus who said it is necessary for the three countries to coordinate their actions and diversify energy supplies.

The idea was supported by the Ukrainian President Viktor Yushchenko. Speaking to the Ukrainian TV5 TV channel, he said: "I hope we will soon witness a special energy strategy of the European Union and Central Asia being developed. Certainly, as we repeatedly stress, in this context Ukraine and other transit countries should not be forgotten."

According to the TV report, the strategy upheld by three countries foresees acquisition of crude oil at the Rotterdam oil exchange, which will then be pumped through the Klaipeda terminal in Lithuania to Kiev or Minsk. The move would not offset the Russian oil supplies, but could provide a soft landing if Moscow cuts its deliveries.

Russia has long been trying to reduce its dependence on transit countries. It pumps the majority of its gas to Europe through Ukrainian pipeline system. Belarus is transit territory to about one third of Russia's Europe-bound crude. The Baltic States and Poland are also transit territories for both oil and gas. After January 2006 spat with Ukraine Russia decided to build the North European Gas Pipeline under the Baltic Sea - the move would bypass the Baltic States and Poland and has provoked harsh criticism from these countries. After January 2007 conflict with Belarus, when Russia was forced to cut oil deliveries to Europe for several days, Moscow decided to double capacity of its Primorsk oil terminal to avoid dependence on Belarus transit.

Source:

http://www.mosnews.com/money/2007/02/16/russianoilalternative.shtml