Belarus hikes price of Russian oil shipments to Europe

Jan 4, 2007, 12:13 GMT

Minsk - Belarus on Thursday slapped a surcharge on Russian oil shipments sent across the former Soviet republic to European consumers, the Belapan news agency reported.

Russian exporters must now pay a transit fee of 45 dollars per ton of oil shipped Westward via Belarusian pipelines. The surcharge is calculated to bring at least 3.5 billion dollars annually to the Belarusian government.

Transit fees in neighbouring Lithuania and Latvia for similar shipment of Russian oil to European users run between 19 and 20 dollars.

Russian crude exports to Europe via Belarusian pipelines for January through November 2006 amounted to 90.5 million tons of oil, according to official data.

Oil transit fees charged Russia by Belarus had been practically nil in the past because of a free trade agreement in effect since 1992 between the two countries, according to the Belapan report.

A statement by the Belarusian oil transit pipeline monopolist Belneftekhim cited 'Russian failure to live up to the terms of the free trade agreement' as grounds for imposition of the tariff.

Retaliation against hardball energy tactics employed by the Russian natural gas monopolist Gazprom was another likely reason for the hike, according to Belarusian energy industry specialists.

Gazprom in the waning days of 2006 pressured Belarus into accepting a 112-per-cent price hike for natural gas imports and the turnover of a controlling stake in the Belarusian natural gas pipeline network.

The estimated increase in Belarusian government revenues from Thursday's oil-transit hike - well in excess of 3 billion dollars - is almost exactly the same size as expected Belarusian losses due to the Russian gas-price spike made official on December 31, 2006.

Belarusian President Aleksander Lukashenko has accused Russia's government of using Russia's control over all of Belarus' energy imports to squeeze political and economic concessions out of Minsk.

Gazprom officials have repeatedly claimed their business, Russia's single largest corporation, simply aims to maximize profits and does not take orders from the Kremlin.

Lukashenko in a Thursday speech to heads of government enterprises said Belarusian business needed to work harder to become more competitive in order to maintain income now that Russia has increased energy costs.

'We must do whatever it takes to continue income generation,' Lukashenko said. 'Otherwise we betray our trust to average Belarusians.'

Almost all of Belarusian industry is government-owned, and managed with a modified form of Soviet-style central planning. Belarus' economy in the past has depended on cheap Russian energy so as to produce competitive goods.