Russian oil flows to Belarus despite talks failure

Russian oil continues to flow to Belarus and via Belarus to the European Union despite a failure by Moscow and Minsk to seal a new oil supply deal at talks on Saturday.
“Belarus is holding back the negotiation process. Russia has made unprecedented and very comfortable proposals about duty-free oil supplies, but Belarus is demanding more,” Spokeswoman of Russia’s Energy Ministry Irina Yesipova told Reuters.

Last Saturday, Belarus’ delegation left Moscow, and Minsk accused Russia of ignoring its arguments in a development that will revive fears of supply cuts to Europe, which has already pushed oil prices up.

Europe, mindful of a dispute in 2007 that cut around a million barrels per day of Russian oil supplies via Belarus (Druzhba Pipeline), are keen the ex-Soviet states resolve their differences. The latest dispute, which centers on the tariffs Belarus must pay for Russian oil, has yet to affect supplies to Europe, but it was a contributing factor to oil’s push to a 15-month high above $83 a barrel during the past week.

Russia said it wants simply to bring energy prices and transit fees into line with the market after subsidizing its neighbors for many years with preferential terms. Much of its oil and gas must cross Ukraine and Belarus to reach Europe. Russia allowed Belarus to import around 20 million tones of oil last year at only 35.6 percent of the current crude export tariff. Russia has said Belarus can now buy only 6 million tones of Russian oil, for domestic needs only, duty-free.

on the other side, Minsk argues all Russian oil should be duty-free, Moscow now wants payment in full for about 14.5 million tones a year of crude that is mostly refined and re-exported.

Refineries belonging to Total, Shell, and BP are among the biggest buyers of crude from Druzhba.


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