EU Bids to Defuse Russia Oil Row (09/01/2007)

Τρι, 9 Ιανουαρίου 2007 - 11:00
The European Union (EU) is to hold talks with Russia and Belarus in a bid to resolve a row which has led to a cut in oil supplies to much of Europe. The EU was dragged into the energy dispute when Moscow cut off a pipeline, accusing Belarus of stealing its oil. The International Energy Agency (IEA) has said European oil markets will be able to cope with the shutdown as all countries have sufficient stockpiles. Belarus has been in dispute with Russia over the price of Russian oil and gas. 'No threat' High level Belarusian representatives have arrived in Moscow for talks after Russia shut off the transcontinental pipeline through Belarus, halting the flow of oil to Germany, Poland and beyond. But despite the cut in supplies the IEA said there was "no threat that product supplies to end users will be disrupted". It added that even if the dispute was a prolonged one refineries "could source crude supplies from alternative routes and some of them are already organising alternative supplies". Meanwhile, Azerbaijan has suspended oil exports to Russia following a pricing dispute with Russian state-backed gas giant Gazprom. Supply worries German Chancellor Angela Merkel - whose country currently holds the presidency of the EU - is meeting the EU Energy Commissioner in Berlin. While Brussels says the Belarus-Russia dispute poses no immediate threat to European oil supplies, Ms Merkel told German TV the row showed the need to diversify energy sources. The latest energy wrangle comes almost a year after deliveries of Russian natural gas to much of Western Europe were disrupted during a dispute over pricing between Russia and Ukraine. However the current row is resolved, Natalia Leschenko, an analyst at Global Insight, said she expected it to end soon and at the expense of Russia. "Transneft and the Russian government are looking to face financial losses and damaged reputation, whereas the outcast status of Belarus in Europe gives it the benefit of invulnerability, which its government uses in full," she said. Escalating row The decision to shut down the Druzhba pipeline is the latest twist in an energy row between Belarus and Moscow that began when Gazprom forced Belarus to accept a huge increase in the price of Russian gas. Last week, Belarus said it would charge Russia $45 (£23) per tonne of oil that passed through its country. The Russian oil pipeline monopoly has refused to pay the duties, saying they are illegal, which led to Belarus launching legal action against the company. On Monday, Transneft said it had been forced to cut oil supplies through the Druzhba pipeline as Belarus had been siphoning off supplies in payment in kind for the duties. The 2,500 mile long pipeline has the capacity to ship more than 1.2 million barrels a day to eastern and central Europe and typically works at close to full capacity. (BBC News, 09/01/2007)