Fitch: Russia, Belarus energy dispute heats up

Fitch Ratings says that European Union energy security may be negatively affected by a new dispute between Russia and Belarus, this time over crude oil transportation.

Belarus's state oil company Belneftekhim has notified Russia's crude oil pipeline monopoly Transneft that a transit duty of $45 per metric ton will be imposed on Russian oil transiting the country after Jan. 1.

The timing came as a surprise as a European Commission group recently met in Brussels to welcome a five-year gas supply contract signed by Belarus and Russia. This agreement averted potential gas supply interruptions like those seen last year during a similar dispute with Ukraine. The key issues remaining are how this will affect Belarus's relations with Russia and how will Russia react to the new tariff, Fitch said.

The agency said the new tariff is aimed at recovering about $3 billion in losses due to the Russian imposed oil export duties. The retaliatory move by Belarus came as a shock in Moscow and Fitch believes this could be the beginning of a more serious conflict between the two neighbors that will eventually impact E.U. oil supplies.

Russia says the transit duty contradicts the trade and economic agreements between the two countries signed in 1992 and that Belarus has no right to impose duties on goods that are merely transiting the country as opposed to being consumed inside the country. It is for this reason the agency said it feels there is scope for this latest conflict to escalate.

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