Russia restarted the flow of oil through its main European export pipeline yesterday after Belarus dropped an oil transit duty imposed last week and agreed to return oil Moscow said it had taken illegally.

"I can confirm that all oil supplies are renewed," European Union Energy Commissioner Andris Piebalgs told a news conference. "All member states that have been affected are receiving oil."

World oil prices fell 70 US cents towards $53 a barrel, near a 19-month low.

Russia, the world's second biggest oil exporter, had closed the Druzhba ('Friendship') pipeline, its largest single oil export route, for more than 60 hours, cutting European Union oil supplies by around 1.5 million barrels of oil per day.

The shutdown marked the climax of a trade dispute in which Moscow doubled gas export prices to Belarus at the New Year and imposed a crippling crude oil export duty equivalent to 10 percent of the gross domestic product of its western neighbour.

Belarus, once Moscow's most loyal ally, responded by slapping the oil transit duty of $45 per ton on Russian oil piped across its territory, effective from January 1.

Russian pipeline monopoly Transneft said it shut the pipeline when Belarus began siphoning off oil to take payment of the levy in kind, and only agreed to restart the pumps after the missing 79,000 tons of oil was returned.

The length of the pipeline meant it took about four hours for the flow of oil to reach Germany, Europe's largest economy, which gets around a fifth of its oil imports via Druzhba.

Credibility loss

Belarus said it resumed pipeline operations on Wednesday night, enabling Russia to turn on the taps and calming fears of a prolonged supply disruption. Druzhba also serves EU members Poland, Slovakia, Hungary and the Czech Republic.

Belarussian Prime Minister Sergei Sidorsky held talks with Russian counterpart Mikhail Fradkov yesterday. Sidorsky said on Wednesday he expected Russia to lift its own trade restrictions on Belarus.

During the dispute Russia also banned sugar imports from Belarus, which normally sells half its annual production of around 770,000 tons to Russia.

The dispute alarmed the European energy market in a strong echo of Russia's gas row with Ukraine exactly a year ago, when a pricing row prompted Russian gas monopoly Gazprom to cut gas supplies on its main European export route.

Russia has blamed this year's row on Belarus, with Energy Minister Viktor Khristenko saying the oil shutdown constituted force majeure, but Moscow has once again given European energy markets cause to question its reliability.

"I hope that a lot of work will be done on the supplier's side to regain this credibility," Claude Mandil, head of the International Energy Agency, told a briefing in Brussels.

Source: China Daily/agencies