Oil Headache for Europe

Belarusian Prime Minister Sergei Sidorsky said Wednesday the duty would be $45 per ton of oil, which was being imposed retroactively from Jan. 1. The tax comes in retaliation for Moscow cutting subsidies on energy supplies to Belarus.

"We have done everything that (Russia) asked us to do, and today the time has come to demand that (Russia) keeps its promises," President Alexander Lukashenko told a cabinet meeting on Wednesday.

"If it does not, we are within our rights to act in turn. By that I mean to raise the question of the transit of oil through Belarus, payment for this transit, payment for the land that is used for oil and gas pipelines, Russian properties here," the authoritarian leader said.

Market watchers said the duty would not affect world oil prices or cause shortages, but it could cause short-term disruptions to the supplies as refiners in Germany and Poland looked for cheaper alternative supplies, Reuters reported.

Under the terms of a gas deal struck late on Dec. 31, Belarus reluctantly agreed to pay $100 per 1,000 cubic meters of gas from Russia, more than double the previous price of $45. Belarus, which is economically dependent on Russia, also agreed to sell 50 percent of state pipeline operator Beltransgaz to Russia's state-run Gazprom as part of the deal.

Tense relations

Moscow had threatened to cut its supplies to Belarus on Jan. 1 unless it agreed to the new supply contract, while Belarus had threatened to disrupt Russian exports to western Europe which pass through its territory.

This had caused concern in the European Union, which imports five percent of its gas supplies through Belarus from Russia -- most of it delivered to Germany and Poland -- and revived memories of gas shortages this time last year caused by a dispute between Ukraine and Russia.

Lukashenko said Wednesday he had told his officials to sign the deal with Moscow "because Russian leaders promised us to find a solution on oil."

Sugar dispute

In another development, exports of Belarusian sugar to Russia have been suspended since Jan. 1, said the head of the state-run agricultural production concern Belgospishcheprom.

"This situation is the result of a series of restrictive measures by the Russian customs service," Ivan Danchenko told reporters in Minsk.

Danchenko denied rumors that that Belarusian companies were sending South American-produced cane sugar to Russia disguised as beet sugar to avoid customs duties.

Coming in the wake of a recently announced hike in Russian duties on oil exports to Belarus, Sunday's deal on gas appears to mark the end of an era of cheap energy supplies from Russia that have subsidized the Belarusian economy since the collapse of the Soviet Union in 1991.