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January 5, 2010

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Home » Business » Energy

Row sees no halt to Russian oil flow

SUPPLIES of Russian oil to Belarus and transit shipments to Europe have continued despite a dispute over prices, Belarusian officials said yesterday.

Marina Kostyuchenko, a spokeswoman for state-controlled company Belneftekhim, said Belarusian oil processing plants are still running and currently receiving Russian oil deliveries. "The amount of supplies is sufficient for their normal operation," she said without elaborating.

Kostyuchenko wouldn't comment on claims that Russian oil supplies were briefly halted after the New Year following the collapse of the price talks.

Belarus said yesterday it was ready to continue talks with Russia and confirmed the transit of Russian oil to customers in Europe through Belarus has not been affected - easing fears of a repeat of last year's cut-off in Russian gas shipments to Europe because of a similar price dispute with Ukraine.

In Moscow, Mikhail Barkov, vice president of the state-controlled Transneft company that runs Russian oil pipelines, also said on Sunday that price arguments with Belarus wouldn't affect Russian oil exports to the West, RIA Novosti news agency reported.

The Belarusian Cabinet said in a statement on Sunday that Moscow's demand that Belarus should pay a higher tax on the bulk of Russian oil shipment contradicted an agreement on a customs union signed late last year.

Russia is the main ally and sponsor of Belarus, but relations between the two ex-Soviet neighbors have been increasingly strained by financial arguments over oil supplies.

Belarus said Russian officials had put "unprecedented pressure" on its delegation during the price talks, describing it as "totally unacceptable."

Russia had said earlier that it was ready to provide tax-free oil for Belarus' internal consumption in line with the customs union deal, but would fully tax all the oil Belarus processes for export to the West.

Belarus buys about 20 million metric tons of Russian crude a year, but consumes only about one-fourth of that. The rest is refined and exported to the West, accounting for more than a third of Belarus' export revenues.

Belarusian experts have estimated that the Russian tax would cost Belarus about US$5 billion this year, or more than 10 percent of its gross domestic product.


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