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Medvedev signs regulation on duty-free oil supplies to Belarus

Oil&Gas Materials 15 February 2010 16:44 (UTC +04:00)
Russian President Dmitry Medvedev signed into law on Monday a regulation on duty-free oil supplies to Belarus following a bitter dispute between the two ex-Soviet republics that threatened crude deliveries to Europe.
Medvedev signs regulation on duty-free oil supplies to Belarus

Russian President Dmitry Medvedev signed into law on Monday a regulation on duty-free oil supplies to Belarus following a bitter dispute between the two ex-Soviet republics that threatened crude deliveries to Europe, RIA Novosti reported.

Russia and Belarus signed in late January an array of agreements on crude oil deliveries and uninterrupted transits to Europe.

Russia earlier offered to supply the ex-Soviet republic with some 6.3 million metric tons of oil for domestic consumption duty-free and demanded Minsk pay full import duties on crude it refines and transits to Europe, dropping considerable subsidies.

Belarus, however, argued that Russia should supply up to 30 million metric tons of oil duty free, saying Russia's demand ran contrary to the deal on the Customs Union signed between the two countries and Kazakhstan in late 2009.

Belarus also threatened to increase transit fees for Europe-bound oil from $3.90 to $45.

Under a compromise agreement between Russia and Belarus, Minsk will receive 6.3 million metric tons of oil duty-free this year, but the volume could rise later depending on the country's economic performance.

Belarus consumes an estimated 8 million tons of oil a year, while its own production amounts to 1.7 million tons.

Russia and Belarus also agreed to increase transit tariffs every year based on an agreed-on formula, with the fee rising 11% this year.

Russian oil supplies via the ex-Soviet republic continued throughout the dispute. A spat between Moscow and Minsk in 2007 led to disruptions in supplies to Poland and Germany.

Russia has had frequent disputes with its former Soviet neighbors over energy prices in recent years, as it has moved to bring tariffs closer to free market levels. The West has accused Moscow of using energy as a political tool in ties with Ukraine and Belarus, major transit nations for its natural gas and oil exports.

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