Russia seeks to allay EU fears over oil supply crisis

Tue, Jan 5, 2010, 00:00

RUSSIA SOUGHT to soothe EU fears of another winter energy crisis yesterday, as Moscow’s officials tried to resolve an oil price dispute with neighbouring Belarus.

Russia reportedly halted oil supplies to Belarus briefly over the weekend, rekindling memories of last January’s gas row between Moscow and Ukraine, which left millions of central Europeans without heat and light and forced many firms to scale back or stop production.

Russia is now locked in talks with Belarus over oil duties for 2010, with Moscow demanding that the government in Minsk pay tax on Russian oil that it imports, refines and exports to the West, while continuing not to pay any tax on oil for domestic use.

Authoritarian Belarusian president Alexander Lukashenko has rejected Russia’s demand at a time of economic hardship for Belarus, which relies on export revenue from crude oil and oil products.

The spat has also further soured relations between traditional allies Moscow and Minsk, as the EU and Washington seek to improve ties with Belarus and reduce Russian influence there.

A similar row in 2007 caused a sharp drop in oil supply to Germany and Poland, which depend heavily on Russian fuel delivered via Belarus.

Moscow is keen to avoid fresh claims from the EU that it is an unreliable energy partner, or that it is using its huge hydrocarbon wealth as a weapon to achieve political goals.

“We are continuing uninterrupted transit [of oil] to western consumers, and yesterday we began supplying Belarusian refineries,” Russian deputy prime minister Igor Sechin told Russian prime minister Vladimir Putin, according to Russia’s Interfax news agency.

The statement seemed to confirm Russia had temporarily halted oil supplies to Belarusian refineries at the weekend, contrary to denials from other officials.

Mr Sechin said talks were continuing and supplies to the EU should not be affected.

“I hope that agreement will be reached as soon as possible, in accordance with our shared interests and with Russian law,” Mr Putin was quoted as saying.

Belarus’s government has denounced Moscow for exerting “totally unacceptable . . . unprecedented pressure” during the oil row.

In a sign that the dispute could escalate, Belarus’s state power firm said it might block electricity supplies to the Russian enclave of Kaliningrad on the Baltic Sea.

That could affect neighbouring Lithuania, which closed its last nuclear power station last week and is now more reliant on Russian energy delivered via Belarus.