Russia clashes over energy with Belarus, Ukraine, EU

MINSK/MOSCOW (Reuters) - Russia plunged back into the disputes over energy with Ukraine and Belarus that have repeatedly disrupted oil and gas supplies to European Union countries, and it also termed EU energy policy as "uncivilized".

Russia on Friday denied remarks by Belarussian President Alexander Lukashenko that it had agreed to increase its crude oil supplies to Minsk, vital for the Belarus economy, and said that it still intended to cut them next year.

On Thursday, Russian President Vladimir Putin criticized Ukraine for failing to agree on a deal, in return for cheaper gas, under which it would lease its pipeline network to Moscow and the European Union.

Russia, the world's top energy producer, supplies over a quarter of Europe's gas and oil needs. Ukraine ships around two thirds of Europe's imports of Siberian gas through pipelines across its territory, while Belarus is mainly responsible for oil deliveries

Clashes over energy pricing and pipeline transit with Ukraine and Belarus have led over the past decade to cuts or halts in Russian oil and gas supplies to Central and Western Europe. These have most often happened over the New Year, when Russia failed to agree on energy supply terms with the two countries.

The European Union has accused the Kremlin of using its energy might as a political tool, while Moscow has argued it wants its neighbors to pay fair prices promptly for energy.

On Friday, Belarussian state news agency BelTA quoted Lukashenko as saying Russia had agreed to increase oil supplies next year to 23 million tonnes (460,000 barrels per day) from 21.5 million this year.

"We have really agreed on the supply ... We will get the oil without any issues," he said.

Moscow was quick to deny the report, insisting it was offering 18.5 million tonnes, an effective cut in supplies.

"As of today, an agreement on supplies to Belarus in 2013 has not been signed," Russia's Energy ministry said in a statement. "The Russian side's offer is supplying 18.5 million tonnes of oil. Supplies in the first quarter of 2013 will be based on the suggested volume."

Russian oil is crucial for the economy of Belarus and is supplied free of Russia's normally hefty export duties as Moscow seeks to keep the country within its political orbit.

Belarus has two large oil refineries that process Russian crude and export gasoline and diesel to the West.

The refining business earns vital hard currency, but Moscow has occasionally bridled over supply terms, part of a complex arrangement that also covers pipeline supplies of Russian oil and gas to Europe via Belarussian pipelines.

Belarus, which suffered from a balance-of-payments crisis in 2011, faces a foreign debt repayment crunch next year when about $3 billion of its liabilities fall due.

UNCIVILISED DECISION

The stand-off with Belarus comes as Moscow is struggling to reach a deal with Ukraine over gas deliveries. Ukraine's reluctance to strike a deal on its gas transit system led to the last-minute cancellation of a visit to Moscow by its President Viktor Yanukovich this week.

Although Moscow has regularly been at odds with both neighbors, it has never faced a situation of simultaneous cuts through both countries to Europe.

At the same time tensions between Moscow and the European Union have risen over economic, political and human rights issues.

Putin, in Brussels on Friday for a Russian-EU summit, said it was unacceptable that EU rules were applied retroactively. He was particularly referring to the Third Energy Package of EU legislation to create a single energy market and prevent those that dominate supply from also dominating distribution.

An EU antitrust case against Russia's gas export monopoly Gazprom as well as EU attempts to diversify its energy suppliers away from Russia and legislation to encourage competition have angered Moscow.

"Of course the EU has the right to take any decisions, but ... we are stunned by the fact that this decision is given retroactive force," Putin told reporters in Brussels.

"It is an absolutely uncivilized decision."

Russia presented the European Commission with new proposals on the legal status of its gas pipeline infrastructure to accommodate its export projects in Europe, Energy Minister Alexander Novak told reporters.

Russia has been seeking exemptions from EU regulation that would allow it to make full use of pipelines bringing gas to Europe by routes that skirt around Ukraine.

(Additional reporting by Alexei Anishchuk in Brussels; Writing by Dmitry Zhdannikov; Editing by Anthony Barker)

Source: http://news.yahoo.com/russia-clashes-over-energy-belarus-ukraine-eu-193032756.html

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