Moscow to Cut Flow of Cheap Oil to Belarus

Posted 13 December 2006 @ 09:04 am EET     Print     Reprint     E-Mail     Comments

MOSCOW (AP) - Russian oil exports to Belarus will be heavily taxed from January 2007, the Russian government announced in a serious financial blow to the isolated regime of President Alexander Lukashenko.

A government statement released Tuesday said the move was aimed at "defending the economic interests of Russia," which claims Belarus makes large amounts of money by refining subsidized crude imports from Russia and selling them on to lucrative Western markets.

The Kommersant newspaper reported Wednesday that the move would cost Belarus at least 1.7 billion dollars per year, over 10 percent of the country's 15 billion dollar annual budget. From January 1, duties on oil imports will rise from zero to 180 dollars per ton of crude, the same level charged to other countries, Kommersant reported.

Belarus refines between 20 million and 22 million tons of oil each year, the paper said. The Belarussian economy, which has recently posted robust growth despite economic isolation from its European Union neighbors, is deeply dependent on Russian economic support, including subsidized energy.

Russia has said it plans to quadruple the price Belarus pays for gas imports to 200 dollars (153 Euros) per 1,000 cubic meters of gas next year, up from just over 46 dollars today sparking serious tensions between the traditional allies.