Russia, Ukraine Settle oil Transit Dispute

December 30, 2009

Russia, Ukraine settle oil transit dispute, agree on tariff hike   

Russia and Ukraine have settled their oil transit dispute that threatened supplies to the EU, agreeing to hike tariffs by 30% in 2010, an official for Ukraine's national energy company Naftogaz said .

"An agreement was reached last night, transit tariffs were increased 30%, with transit remaining at [the 2009 level of] 15 million metric tons of oil," Valentyn Zemlyanskiy said. Russia's Energy Ministry confirmed the signing.

 "The agreement has been signed," ministry press secretary Irina Yesipova said. Russia warned the European Union of a possible cutoff of oil supplies to Slovakia, the Czech Republic and Hungary due to transit fee disagreements with Ukraine , echoing the cutoff of Russian gas supplies to Europe in early January amid a price and debt dispute between the two ex-Soviet neighbors.

Ukraine and Russia later in the day moved to calm fears, saying the dispute will not affect supplies to Eastern Europe, and the deal for 2010 will be reached shortly.

Moscow said it had warned the EU of a possible disruption in line with its obligations of "early warning" about potential energy risks. Russian premier Vladimir Putin said in Vladivostok  that rows with transit nations have undermined Russia's image as an energy supplier, prompting Moscow to seek alternative pipeline routes. He accused transit nations of blackmailing Russia.

Russia had gas disputes with Ukraine in winter 2006 and 2009 which affected consumers in Europe. Another ex-Soviet transit nation, Belarus, cut Russian oil supplies to the EU in January 2007 also amid a price row. Ukraine, like Belarus, is a major transit route for oil pumped to Eastern Europe via the Druzhba pipeline.

 Ukraine transits about 80% of Russian gas shipments to the European Union, and itself relies on Russian supplies.    

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