BELARUS NEWS AND ANALYSIS

DATE:

12/04/2007

Pipeline around Belarus Proposed Again

The Ministry of Industry and Energy has again introduced a draft resolution on a second line of the Baltic Pipeline System, with a capacity of 80 million tons per year, to be built by Transneft. The project had been used by Russia as a means of pressuring Belarus, since it would allow Russia to transport oil without using the Friendship pipeline, which passes through Belarus and Poland. The discussion of the resolution will take place behind closed doors - a good indication that a decision has already been in favor of the resolution.

The new line will span Unecha-Velikie Luki-Primorsk. It would increase the capacity of the port at Primorsk to 150 million tins per year and allow Russia fully to bypass Belarus and Poland with its exports to the EU. The Industry and Energy Ministry commented that implementing the project will "encourage the growth of Russia's export potential and allow it to reduce transit risks," but declined to mention specific details of the proposed line.

On January 1, 2007, a Russian duty of $180 per ton on oil exported to Belarus went into effect. In response, Belarus imposed a $45 per ton transit fee on oil pumped through the Friendship line. Transneft proposed the first version of the resolution on a new branch of the Baltic Pipeline System on January 3. Belarus withdrew the transit fee on January 10, after a telephone conversation between Russian President Vladimir Putin and Belarusian President Alexander Lukashenko. On January 12, the Russian duty was reduced to $53 per ton, and the resolution on a new Baltic Pipeline branch was returned "for development" in February.

Transneft vice president Sergey Grigoryev told Kommersant that it would take a year and a half to bring the new pipeline online. He would not speculate on when the government would make a final decision on it. Industry experts estimate that the new branch would cost $2-2.5 billion.

Source:

http://www.kommersant.com/p758123/r_527/petroleum_transit_Russia_EU_Belarus/