Jan. 8, 2007
The Russians continue to have problems over oil and gas with their fellow states in the former Soviet Union.

The Russians continue to have problems over oil and gas with their fellow states in the former Soviet Union. Consider Belarus, where the government has imposed a customs duty on Russian crude transported through the country’s pipelines.

Belarusian Prime Minister Sergei Sidorsky said the customs duty would amount to $45/tonne of oil effective Jan. 1.

The total customs duty will add up to quite a few dollars, too, since Russia’s oil transit through Belarusan pipelines comes to some 70-80 million tonnes/year and reaches several important markets.

The 1,923-km Gomel oil pipeline carries supplies toward Ukraine, Poland, and Germany and accounts for more than 70% of all oil transit through Belarus, while the 1,065-km Novopolotsk oil pipeline handles shipments to the Baltic states.

Tit for tat

Sidorsky, defending his country’s action, said a draft of the decree imposing the duty on oil transit, which is legally based on a 2004 law on foreign economic activities, was submitted to the government on Dec. 31, 2006.

“The government instructed the Economy Ministry and the State Customs Committee to inform the Russian Economic Development and Trade Ministry and the Transneft company about this,” he said.

Sidorsky also said Russian Prime Minister Mikhail Fradkov and he came to an agreement at a recent meeting: “every possible measure will be taken to relieve the existing tensions.”

Tensions? Ah, that’s where the drama comes in as the hastily conceived Belarusian tax is actually a counter attack on Russia’s recent price rises for gas and crude.

In fact, Belarusian President Alexander Lukashenko lashed out angrily at the Russian leadership over energy price increases, calling its conduct “shameless.”

Pay for services

The customs duty and harsh remarks came after Belarus avoided a cut off of its gas supplies on Jan. 1 only by agreeing to pay twice the previous price this year and even more in the future.

The Belarusians also are upset about a new customs duty Russia plans to impose this year on oil exports to its neighbor. The customs duty would deprive the Belarusian government of major profits it has reaped by exporting products made from cheap Russian crude.

As a result, Belarus has reportedly stopped importing Russian oil as a way of persuading Moscow to reconsider the duty of $180/tonne, saying the additional charge makes oil purchases too expensive and could badly damage the economy.

“If they are drowning in petrodollars and other currency income and have place us in conditions worse even than Germany and other European countries, then let’s ask this rich Russia to pay us for our services,” said Lukashenko, in nationally televised remarks.

In addition to the customs duties on oil passing through his country, Lukashenko said he had ordered the government “to send Russia a proposal on payment for everything they get here for free-from military facilities and transit.”