View Full Version : Europe - Russian Energy Problems?

Tuesday, January 9th, 2007, 12:57 PM
Not for me to judge clearly - but the latest mini-crisis involves a dispute between BelaRus & the Russian Government (I understand) and has resulted in the Russian authorities closing down the Oil Pipeline to the West - especially to Germany and Poland. Whilst there are ample oil reserves in some countries, others "down the line" are not perhaps so fortunate. It is clearly not in the same league as the Gas Crisis in the Ukraine last year, but again raises the question of the Wisdom of Western Europe becoming in any way dependent on Russian Energy supplies. Observations welcomed!! :)

"" Russia shuts oil pipeline in trade dispute

"" Daily Telegraph 09/01/2007

Russia halted oil exports to Europe via Belarus yesterday as a bitter trade dispute escalated, renewing concerns that Moscow is bent on pursuing aggressive energy diplomacy.

Taps were turned off on pipelines to Poland and Germany but the European Commission said there was no immediate risk of shortages in either country because of ample stocks in refineries.

The commission was also investigating whether the supply was cut on another branch of the 2,500-mile pipeline feeding Slovakia, Hungary and the Czech Republic.

A spokesman for Andris Piebalgs, the European energy commissioner, said: "We have contacted the Russian and Belarussian authorities and demanded an urgent and detailed explanation for this interruption."

Andrei Sharonov, Russia's deputy trade minister, said Moscow had been forced to suspend crude oil exports via the Druzhba (Friendship) pipeline after disruptions he blamed on Belarus.

"We view this situation as force majeure," he told Russian television. Transneft, the Russian state pipeline operator, also accused its neighbour of siphoning off 79,000 tons of oil destined for Europe since the weekend.

Moscow was last night preparing to receive a Belarussian delegation for urgent talks on the dispute, which last week saw Belarus slap a transit tax on Russian crude in response to a Russian decision to impose export duties on crude oil that Belarus buys from Russia.

The row came days after Belarus had narrowly averted a threatened cut-off of Russian natural gas supplies by agreeing to a demand by the Russian monopoly Gazprom that Minsk pay double last year's price for imported gas.

The disruption to Russian oil supplies once again highlighted concerns about European energy reliance on Russia, a year after a pricing dispute with Ukraine briefly affected EU imports of Russian natural gas.

Last January Georgia accused Moscow of sabotage after gas blasts on Russian pipelines cut off supplies to Georgia and Armenia. Russia dismissed the remarks as "hysteria".

Russia moves about a fifth of its oil exports, about 1.2 million barrels a day, through Belarus: 18 million a year are supplied to Poland and 22 million to Germany.

The dispute is rooted in Moscow's frustration with Alexander Lukashenko, the Belarussian president.

Russia has traditionally seen Belarus as an ally, acting as a military buffer between it and Nato.

The inefficient, Soviet-style economy in Belarus and Mr Lukashenko's popularity has depended heavily on subsidised Russian energy, but the Kremlin has grown impatient at supporting his regime while receiving insufficient return.

Mr Lukashenko, whose repressive tactics have made him a pariah in the West, has refused President Vladimir Putin's offer to incorporate his country into Russia as a province.

At the weekend he vowed that Belarus will defend its sovereignty. (??)
"Never and nowhere did I say that we would hand over our country to be broken up and incorporated into another one," he said. ""


""The Times January 09, 2007

""Russians turn off Europe's oil supply

""Alarm at Moscow's strong-arm tactics

""Merkel tells The Times 'we need secure energy'

Europe’s oil supplies from Russia were being held to ransom last night as the Kremlin fell into bitter dispute with a former Soviet satellite state.

Moscow abruptly halted millions of barrels of oil destined for the EU via Belarus in an increasingly hostile wrangle with its neighbour.
The move raised further questions over whether Western Europe can trust Mr Putin for its energy supply. Experts said that Russia had a deeply entrenched habit of manipulating oil and gas supplies as a substitute for diplomatic policy.

Russia’s strong-arm tactics have added resonance in Britain, amid persistent speculation that Gazprom, the Kremlin-controlled gas group, will seek to buy Centrica, the British Gas group, which has 16 million gas and electricity customers in the UK. Angela Merkel, the German Chancellor, told The Times last night that Germany will use its six-month EU presidency to improve energy security on the Continent. In her first interview with a British newspaper she signalled that she would take a harsher line towards Russia than her predecessor, Gerhard Schröder, who is now on the board of a German-Russian consortium constructing a gas pipeline linking Russian gasfields with Western Europe.

“For us, energy is what coal and steel used to be,” she said, referring to the driving forces behind the European project.

Russia’s “gas war” with Ukraine last January caused supplies to Europe to drop briefly by a third during one of the coldest winters recorded. In this case, Mr Putin’s struggle with President Alexander Lukashenko of Belarus, branded “Europe’s last dictator” by the US, once again reduced the EU to watching nervously from the sidelines as its energy supplies were hit.

Belarus considered itself Moscow’s closest ally until a week ago, but was on the verge of a trade war last night after the bitter flare-up over oil duties. More than 1.2 million barrels of oil a day flow from Russia through the Druzhba, or Friendship, pipeline, providing almost a quarter of Germany’s needs and 96 per cent of Poland’s imports, as well as supplies to Ukraine, Hungary, Slovakia and the Czech Republic.

Andrei Sharonov, Russia’s Deputy Trade and Economic Development Minister, accused Belarus of jeopardising contracts with European customers by imposing a tax on oil passing through the pipeline. Relations between the two countries have soured rapidly since New Year’s Eve, when Belarus and Russia’s state-run monopoly Gazprom came within minutes of failing to agree a gas contract for 2007.

The Government in Minsk was forced to accept a doubling of gas prices to prevent supplies from being cut to its ten million citizens.

The oil dispute centres on a tit-for-tat row over taxes. Minsk introduced a penalty on January 1 on Russian oil crossing Belarus to Europe, in retaliation against Moscow’s decision to slap a duty on oil it sold to Belarus. A government delegation from Belarus flew to Moscow last night to try to negotiate a settlement. But Mr Sharonov said that there would be no talks until Minsk cancelled its tax. Europe should expect to see the natural resources giant use the same ploy in the future to extract market prices for oil and gas out of former Soviet states, experts said.

Andris Piebalgs, the EU Energy Commissioner, said that he was seeking an “urgent and detailed explanation” about the cut in oil deliveries.


Moscow in talks on oil dispute

A Belarusian government delegation has arrived in Moscow to hold talks on a trade dispute that has led to a suspension of Russian oil supplies to Europe via Belarus. Led by Vice-Premier Andrei Kobyakov, the delegation will meet with Russian officials to find a solution to the transit of oil through Belarus, the Belarusian Embassy in Moscow was quoted as saying by the ITAR-Tass news agency. Spokespeople at the embassy could not immediately be contacted.

Tuesday, January 9th, 2007, 01:07 PM
Deutsche Welle :Energy 08.01.2007

Germany Hit As Russia Halts Oil Exports to Belarus

The bitter Russia-Belarus row has meant less oil is being pumped to some German refineries .
Russia has halted oil exports passing through Belarus, threatening wider disruptions in Europe. However, Germany has underlined that its oil supplies are safe for now.

The German Economics Ministry on Monday insisted that the country's oil supplies were not threatened by an interruption of flows through the Druzhba oil pipeline, which supplies Russian oil to Germany and Poland via Belarus.

"I view the closure of the important Druzhba pipeline with concern," Economy Minister Michael Glos said. "The current situation is not dramatic for Germany," he said.
"There are sufficient reserves of crude oil at the refineries to ensure supplies even if there is a long gap in deliveries." Glos added, saying he expected deliveries via the pipeline to be fully resumed as quickly as possible.

Russia stops oil exports to Belarus

State television in Belarus, a former Soviet republic, reported on Monday that the transit of Russian crude oil across Belarus to western Europe had been halted.

Russia's pipeline monopoly Transneft said on Monday it was forced to act because Minsk had been illegally siphoning off oil from the Druzhba pipeline system. (!!!)_

"The Belarusian side began taking transit oil as payment in kind for a new duty it had illegally imposed," Transneft Vice-President Sergei Grigoryev told the Reuters news agency. "We therefore reduced transit supplies, equal to the amount being taken. We then reached the point where we had to stop supplies completely."

Belarus and Russia, which have traditionally enjoyed close ties, have been locked in a bitter gas pricing row. At the beginning of the year, Belarus slapped a transit tax on Russian crude oil which passes through the country in response to a Russian decision to impose export duties on crude oil that Belarus buys from Russia.

The row over transit fees came just days after Belarus had narrowly averted a threatened cut-off in Russian natural gas supplies by agreeing to a demand by Russian monopoly Gazprom that Minsk pay double last year's price for imported gas.

Germany says consumers won't be affected

Europe is heavily reliant on Russia for its oil and gas and extremely vulnerable to Russian supply cuts.
About 50 million tons of crude oil pass through the Druzhba pipeline each year. Of that, 18 million tons are supplied to Poland and 22 million tons to the German refineries of Schwedt and Mider Spergau.

German Economics Minister Glos said the development "shows once again that a balanced energy mix is imperative" for secure energy supply "and that one-sided dependencies must not be allowed to develop."

Both Germany and Poland have confirmed that oil supplies to some of their refineries have been disrupted due to the Russian interruption of oil exports to Belarus.

The MWV oil supply federation in Hamburg said that "there have been limited pump interruptions on the Druzhba pipeline in recent days."

The pipeline supplies the PCK Schwedt refinery and the MIDER Total refinery near Leuna in eastern Germany.

"The running of the refineries is currently not affected," MWV said. "Nevertheless, as a precautionary move, alternative routes of supply for crude oil are being drawn up, for example, via the port of Rostock."

An unusually mild winter means Germans won't be needing too much oil for heating
Supplies to consumers were not in jeopardy, MWV insisted. "There is a crisis system in place to offset any interruption in supply," it added.

A spokeswoman for Total, which operates the Leuna refinery, said that supplies had stopped overnight. "But supplies to customers have been safeguarded and the refineries are functioning," she insisted.

The spokeswoman also said the reasons for the stoppage were not yet clear, but insisted that the refineries had sufficient reserves, even if she declined to say how long those reserves might last.

"We're working on an alternative supply if that should become necessary," she said.

EU demands explanation

The European Union on Monday demanded an "urgent and detailed" explanation for the interruption of oil supplies.

"I would like to underline that there is no immediate risk of the interruption of the oil supply in the short term," said Ferran Tarradellas, the EU executive arm's spokesman on energy issues.

He added that the commission planned to hold a meeting in coming days of the Oil Supply Group, a team of European experts, to consider any measures that may be required.

Tarradellas said that Germany had about 130 days of oil reserves and Poland had 70 days worth. ""

Monday, January 22nd, 2007, 11:21 AM
""Merkel Calls for Improved EU-Russia Energy Ties""

""Deutsche Welle 21.01.2007

German Chancellor Merkel and Russian President Putin wrapped up a meeting Sunday, agreeing to work to improve EU-Russia energy ties to avoid tensions following supply disruptions.....

After a brief meeting with President Vladmir Putin at the Black Sea resort of Sochi in Russia on Sunday, German Chancellor Angela Merkel called for improved energy ties between Russia and the European Union to avoid "tensions" following supply disruptions.

Merkel said there was a need to improve communication with Russia.

Merkel said: "Communication on certain issues must be better to avoid irritations."

A new EU-Russia partnership deal "could include precise mechanisms on ways to inform each other in order to avoid tensions, misunderstandings or disappointments," Merkel said.

Merkel was given a polite but cool reception by Putin

Putin said Russia was ready for an open dialogue on energy with Europe based on all sides' interests.

"(On energy) we hope that our partners, too, will adhere to principles of equal rights and mutual respect of interests," Putin told journalists.

The EU's latest energy worries were triggered when Moscow shut off the Druzhba oil pipeline, which carries about 10 percent of Russia's crude exports to the bloc, because of an oil pricing dispute with transit country Belarus.

Though supplies were resumed within days, the incident highlighted Europe's heavy reliance on Russian gas supplies and sparked off a new debate on energy security.

Putin says Kosovo's future is internal matter

The two leaders also touched on a host of other issues, chiefly the ongoing Serbian election, international diplomacy in the Balkans and the fate of the Kosovo province.

Russia is a traditional ally of Serbia
Serbia voted on Sunday for a new government in polls pitting pro-Western forces against ultra-nationalists as a decision on the future of the country's breakaway province of Kosovo looms.

Putin warned that a decision on the future status of Kosovo must not be imposed from the outside and should be accepted both in Belgrade and Pristina.

"Russia believes it is unacceptable that a decision on the status of Kosovo be imposed from the outside," Putin said.

"A long-term resolution of the problem can be achieved only if it is acceptable both to Belgrade and to Pristina," Putin said. "Europe does not have an interest in one of the sides, let's say Belgrade, having to accept a decision that is humiliating for the Serbian people," Putin said.

Russia, a traditional ally of Serbia, has opposed independence, warning that this could lead to instability in other breakaway territories.

"If we ignore territorial integrity ... then other peoples will
have the right to say 'we're going to do the same,'" Putin said. "This isn't just in the post-Soviet world but also in other countries, including European countries."

Merkel wants democratic forces in Serbia strengthened

Earlier in the week, Merkel said any decision on Kosovo must bring "maximum" satisfaction to the citizens of the province without stirring unrest in Serbia.

On Sunday, Merkel reiterated her stance, saying she did not want efforts to resolve the status of Kosovo to destabilize the situation in Serbia.

Merkel added she hoped the election in Serbia would strengthen democratic forces in that country.

"I hope that the democratic forces in Serbia are strengthened by the election," she told the news conference.

Merkel and Putin also supported the so-called quartet of international mediators launching a new drive to revive the Middle East peace process.