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Russia and Belarus talks fail to end oil transit row

A cart passes by an oil-pump station which is part of the Druzhba pipeline at Turov, 270km southwest of Minsk, on Tuesday. PHOTO: AFP

European countries faced continued disruption to their oil supplies yesterday after talks failed to end an oil transit row between Russia and Belarus that threatens relations between Moscow and the EU.

Russian President Vladimir Putin said on Tuesday that Western consumers must be spared the effects of disrupted supplies after German Chancellor Angela Merkel warned the crisis was destroying confidence in Moscow.

Russia confirmed that it had cut oil shipments through the Druzhba (Friendship) pipeline to western Europe, but Putin urged government ministers to "do everything to secure the interests of Western consumers."

He added, however, that Russia might nonetheless have to reduce oil output owing to the crisis.

Despite the gravity of the situation, talks between Russia and Belarus ended in Moscow on Tuesday with no agreement in a dispute that was quickly spreading well beyond the two countries' borders.

Russian news agencies quoted Economic Development Minister German Gref as saying that "we are ready to begin talks on all questions as soon as illegal and unprecedented measures such as the transit tax and shutting down of petrol shipments have been lifted."

"This is our demand and we will not negotiate as long as these conditions have not been fulfilled," Gref said after a long meeting with Belarusian Deputy Prime Minister Andrei Kobyakov, adding that Russia would seek alternative delivery routes if Belarus refused.

"That means that part of the oil would not be shipped out of Russia, and we will have to work on slashing the volume of oil production," which would be "a very negative scenario for both Russia and Belarus," Gref warned.

The row blew up on Monday when Russia cut oil supplies via Belarus in response to what Moscow said was the former Soviet republic's illegal demand for a transit fee and siphoning of oil. The cut-off impacted oil supplies to EU members Czech Republic, Germany, Hungary, Poland and Slovakia.

In Berlin, Merkel criticized the row between Moscow and Minsk and the fact that European countries had not been kept informed.

"It is not acceptable when there are no consultations about such moves," Merkel said when asked about Russia's reliability as an energy partner.

"You cannot build cooperation based on true mutual trust in this way," said Merkel, whose country has in recent years been considered Russia's closest EU partner.

About 12.5 percent of the oil consumed by the EU transits through the Druzhba pipeline from Russia, which provides half of the 27-nation bloc's oil imports.

The pipeline supplies about 20 percent of Germany's annual oil imports, or 23.4 million tonnes in 2005, according to the German oil industry federation.

Belarus and its giant neighbor Russia each accuse the other for the disruption. Khristenko acknowledged Russia's role in cutting off the oil, but said it had been forced to act after Minsk's "non-Slavic foul play" in blocking oil transit on its end.

"Since the morning of Jan. 8, Russia has not been supplying oil through the pipeline in the direction of Belarus," Khristenko told reporters.

"If the valve is closed to you on the other end of the pipeline, then you have nowhere to ship that oil" without causing a "technical failure" or re-routing the oil in Russia "not knowing where or to whom," he said.

The row was sparked when Belarus imposed a US$45 per tonne tariff from New Year's day on Russian oil transiting through its territory. Minsk's move was in retaliation for a separate Russian tariff as well as a more than doubling of gas prices for Belarus imposed at the New Year.

Khristenko said Russia would seek to compensate for the cuts with increased shipments to Europe by rail and river transport.
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