Oil and Gas

UPDATE 3-Russia, Belarus sign oil deal, resolve supply row

* Sechin tells Medvedev supplies to Europe guaranteed

* Minsk says to get 6.3 mln tonnes duty free oil in 2010

* Minsk says has option to boost duty free oil purchases

(Adds comments on tariff rise)

By Darya Korsunskaya

MOSCOW, Jan 27 (Reuters) - Russia and Belarus signed a new oil supply deal on Wednesday, resolving a month-long row that had threatened to disrupt Russian oil flows to European Union members Germany and Poland.

Russian and Belarussian officials said the new agreements guaranteed trouble-free supplies of Russian crude to Belarussian refineries at least until the end of September when the two sides would meet again to discuss potential changes to volumes.

“The documents that were prepared are very balanced and are pretty compromising and are followed by our joint declaration that guarantees uninterrupted supplies. And this is what European customers expect from us,” Russia’s top energy official Igor Sechin said at the signing ceremony.

Europe, mindful of a dispute in 2007 that cut Russian oil supplies through Belarus, was keen for the ex-Soviet states to resolve the row as quickly as possible but talks between Moscow and Minsk have broken down repeatedly since the start of 2010.

The Belarussian spur of the Druzhba pipeline supplies about one-tenth of Europe’s shipments from west Siberia, going to Poland and Germany.

Supplies to Europe have not been affected this time but oil prices jumped at the start of the year after Russia suspended shipments to the two refineries in Belarus. [ID:nLDE602045]

Belarus gets over 20 million tonnes of oil from Russia annually for processing at its two plants but keeps only 6 million tonnes of refined products for domestic needs while the rest is exported to the West.

Russia has drastically cut subsidies to Belarus in past years after political relations with Minsk chilled.

Moscow has said it is ready to supply 6 million tonnes of duty-free oil this year and would charge full duties on the rest. Minsk has insisted on getting at least 9 million tonnes.

Belarussian agencies quoted Belarussian Vice Prime Minister Vladimir Semashko as saying Minsk would get 6.3 million tonnes of duty-free oil in 2010, but the volumes could be adjusted after September if the economy grew faster than expected.

He also said the tariffs for Russian oil transit through Belarus will rise 11 percent this year as a part of the deal.

According to Semashko, Russian companies that guarantee the return of oil products from Belarussian refineries to Russia for exports would be allowed to ship oil to Belarus free of duties.

“Thanks to the agreements reached the Belarussian budget losses will not be as big as recently anticipated,” news agency Belta quoted Semashko as saying. (Additional reporting by Vladimir Soldatkin and Dmitry Zhdannikov, writing by Dmitry Zhdannikov, Editing by Amanda Cooper and Sue Thomas)