BELARUS NEWS AND ANALYSIS
DATE:
02/01/2010
Belarus, Russia bid to avert new energy war
Reuters/Moscow
Senior Russian and Belarussian officials yesterday restarted talks in Moscow on a new pricing structure for 2010 oil deliveries in a bid to avoid a fresh energy war that could cut crude supplies to Europe.
Talks between the ex-Soviet states broke down on New Year's Eve, raising concerns in Germany and Poland that supply disruptions experienced in January 2007 after a similar dispute could be repeated. Oil supplies, however, are still flowing.
Government officials from both countries met in Moscow yesterday for the first time since Thursday, said Mikhail Barkov, vice-president of oil pipeline monopoly Transneft.
"We hope to wrap up the talks as soon as possible," he said. Barkov refused to comment on Russia's pricing demands, but insisted that oil flows to Europe were safe, saying, "There is no danger to oil transit supplies through Belarus to Europe."
Belarus has complained of heavy-handed Russian negotiating tactics during end-of-year talks in Moscow, and said the high prices proposed by Russia would breach the terms of a fledgling customs union between the countries.
Belarus receives about 400,000 barrels per day from Russia via the Druzhba pipeline to process at its two refineries, and exports most refined products to the West while consuming a much smaller portion domestically.
The avoidance of supply cuts will be seen as a relief in Germany and Poland after the disruptions three years ago. But while a deal is still pending, the threat persists.
European politicians have repeatedly accused the Kremlin of using its energy might to intimidate its neighbours, 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 subsidising neighbours with cheap energy for years.
Druzhba, one of the world's biggest pipelines by length and capacity, supplies major refiners in Germany covering some 15% of the country's oil needs, while Poland relies on Druzhba for more than three-quarters of its consumption.
Russian oil output meanwhile grew by around 1.5% in 2009 to a new post-Soviet high, putting the world's largest crude producer on an upward trend again after a 2008 blip, when production fell for the first time in a decade.
Energy ministry data yesterday showed the country extracted 9.925mn bpd last year, a record since the collapse of the Soviet Union, up from 9.78mn bpd in 2008 and 9.87mn bpd in 2007.
The resumption in growth came as a surprise. At the end of 2008, analysts had largely expected the decline to continue due to a lack of new greenfield developments and a sharp drop in prices.
But as crude prices recovered and oil majors such as Rosneft sped up the development of East Siberian fields to fill Russia's first pipeline to the Pacific, output outpaced expectations and growth is expected to continue.
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