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Thursday, January 11, 2007



 

 

 

   Russia to Scale Back Oil Output

  Citing “problems in transiting crude across Belarus,” Russian President Vladimir Putin urged Cabinet colleagues to lean on oil companies to explore “the possibility of scaling down extraction of oil” and hinted at diverting oil transit routes away from Minsk.
 

 

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Citing “problems in transiting crude across Belarus,” Russian President Vladimir Putin urged Cabinet colleagues to lean on oil companies to explore “the possibility of scaling down extraction of oil” and hinted at diverting oil transit routes away from Minsk.

The decision to cut back on oil production was also suggestive that Russia may not have as large a storage as initially believed especially since it would take years for Russia to implement any change to oil routes. Coming a day after Russia cut off pipeline deliveries of crude through Belarus to European Union nations, Western nations say that they have started to look at alternate sources than Russia to depend on oil. Given that this is the second year in a row that Moscow had fought with transiting nations without guaranteeing supplies to European customers (last year Russia and Ukraine had differences around the same time on transit levies), Europe now considers Russia as an unreliable supplier of fuel.

Ukraine, Germany, Poland, Hungary, the Czech Republic, and Slovakia have been affected by Putin’s decision to cut off supply to Belarus. The standoff with Belarus came up on Russian accusations that Minsk siphoned off 79,000 tons of Russian oil bound for Europe while continuing to demand ridiculously low rates for energy. Russia currently has a 4,400 kilometer pipeline to pump 1.2 million barrels a day to Eastern and Central Europe. Moscow is keep to stop Belarus to act as a middleman by buying energy at low cost from Russia using the duty-free bilateral agreement and selling them off at higher prices.

Late reports say that Russia has restarted pumping oil through Belarus.

 

 

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