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Russia averts oil crisis, restarts oil shipments to Belarus

Oilfield Technology,

Russia has restarted oil shipments to Belarus, following a cut-off that last several days.

The dispute surrounds the Druzhba pipeline system (named the ‘friendship pipeline’), which carries Siberian oil to Europe. Russia began curbing supplies through the pipeline to Belarus’ domestic market after a pricing deal between the two countries expired on 31st December 2009.

Talks over tariffs ended without resolution on 31st December and supplies were cut-off for four days.

On Monday 4th January 2010, Russian officials claimed that deliveries had been resumed. Russia’s Deputy Prime Minister Igor Sechin said European customers were unaffected by the dispute and that Russian crude was flowing normally through the pipeline. Talks continue.

The majority of the oil transported through Druzhba (approximately 800 000 bpd or 37 million tpy) goes through Belarus to refineries in Poland and eastern Germany. Belarus keeps and refines an additional 21.5 million tpy for itself and its European customers. Moscow has historically taxed Belarus at a much lower rate that than of its international customers, but now wishes to charge Belarus full customs duty on the refined oil it doesn’t consume domestically.

Though transport volumes to Europe were not reduced during the cut-off, there remained the possibility that Belarus could retaliate by drawing off exports bound for Europe.

The Ukraine was accused of doing this a year ago, when it suffered a gas cut-off at the hands of Russia. This left several eastern European countries without gas for days.

An early-warning mechanism was instated as a result of last year’s dispute, although Russia failed to use it to give an early-warning this time around.

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