MOSCOW, Jan. 11 (Xinhua) -- Russia and Belarus failed
to clinch a new oil supply deal during their talks on Saturday, which was the
latest attempt to resolve a pricing dispute.
Though both sides have expressed their willingness to
continue negotiations, the standoff has raised concerns over potential supply
cuts to Belarus and the European Union.
Belarus imported about 20 million metric tons of
Russian oil last year at only 35.6 percent of the current crude export duty,
which stood at 267 U.S. dollars per metric ton as of Jan. 1. The transit country
consumes about a quarter of the Russian oil deliveries with the rest processed
and pumped to the West.
Belarus was seeking a similar discount for 2010 but
failed to strike a new agreement with Russia before the previous accord expired
at the end of December.
Russia said it has offered to continue "preferential"
terms this year, which allow Belarus to buy 6 million tons of crude for domestic
consumption without tariffs but demand full import duties on some 14.5 million
tons of oil bound for European markets.
Belarus insists all Russian crude should be
duty-free, citing an agreement on customs union signed late last year. However,
Russian Prime Minister Vladimir Putin argued last week that energy deliveries to
Belarus were not covered by the customs union between the two countries and
Kazakhstan, which came into effect on Jan. 1.
As negotiations repeatedly broke down over the New
Year period, Russian oil flows to Belarusian refineries, Naftan and Mozyr,
suffered a brief interruption before they resumed on Jan. 3.
The spat, coming as Europe is gripped by freezing
weather, fueled fears about a repeat of disruptions three years ago, when Russia
suspended supplies via Belarus to Germany and Poland.
Russian Deputy Prime Minister Igor Sechin, who led
the Russian delegation at the talks, earlier pledged unaffected oil supplies to
European customers while Moscow and Belarus were working on a new pact.
The dispute is the fourth time in five years that
Russian energy supplies through Belarus or Ukraine have come into question
around New Year holiday. Russia cut off gas deliveries to Ukraine about a year
ago, leaving tens of thousands of Europeans without heating gas in the depths of
winter.
The West accused Russia of using its vast resources
to bring its former Soviet neighbors to heel, while Moscow said it wants simply
to raise energy prices and transit rates to market levels after subsidizing its
neighbors for many years with preferential terms.
"With both sides standing firm now, the dispute could
get worse before it is resolved," Andrew Neff, an analyst at IHS Global Insight
in Washington, was quoted as saying by Russian daily the Moscow Times.
Minsk's revenues from oil re-exports hit 10.7 billion
dollars in 2008 and plunged to 6.5 billion dollars in 2009, accounting for35
percent of the country's total exports, according to estimates by Yaroslav
Romanchuk, head of the Belarusian Scientific Research Mises Center, a think
tank.
It is estimated that Russia's new offer means a
2.5-billion-dollar increase in costs for Belarus, or 5 percent of the country's
gross domestic product.
If Russia prevails in the dispute, Belarus will earn
3-4 billion less this year, resulting in an economic shrinkage of 6-8 percent,
Romanchuk said.
The dispute has also contributed to the oil price's
surge to a 15-month high above 83 dollars per barrel recently. Urals crude,
Russia's main export earner, rose to 80.37 dollars a barrel on Friday, its
highest price since October 2008.
Germany and Poland are believed to be hit hardest
once Russia halts shipments through the Druzhba pipeline. Germany depends on
Russian crude for about 15 percent of its total consumption, and Poland buys
from Russia to meet 75 percent of its market demands.
Minsk has threatened to raise the transit fee for its
European customers more than tenfold, from 3.9 dollars to 45 dollars per metric
ton, should Moscow not agree to its conditions, RIA Novostinews agency quoted an
unidentified expert close to the talks as saying.
Belarus last week even warned of stopping electricity
transmissions from Russia to its Baltic enclave of Kaliningrad in an apparent
retaliation at the duty hike.
Sergei Kolchagin, a senior fellow at the Russian
Academy of Sciences' Institute of Economics, said Minsk is highly likely to
accept Moscow's terms since it has few other options.
Belarus would exert pressure on Russia by threatening
to withdraw from their common air border security and air defense system pacts,
Kolchagin said, although it seemed unlikely the bargaining would go that far.
Another possible solution would be Russian firms'
acquisition of the Belarusian refineries, a Russian proposal that has so far
received no response.
