Oil and Gas

FACTBOX-Russia's relations with oil and gas transit states

MOSCOW, June 24 (Reuters) - Russia is the world’s largest holder of gas reserves and the biggest gas exporter so its often stormy relations with transit states have become a major cause for concern among its European customers.

On Thursday, Russia resumed gas supplies to Belarus and paid gas transit debts to Minsk in a move to ease fears of supply cuts to the European Union, which had called the dispute an attack on the entire bloc. [ID:nLDE65N0N4]

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The pricing row with Belarus became the latest spat in Russia’s relations with ex-Soviet states.

The following is a summary of disputes and price negotiations and brief profiles of transit states.


Russia's gas export monopoly Gazprom GAZP.MM supplies Europe with a quarter of its gas needs and around 80 percent of this passes through pipelines across Ukraine.

Russia expects to ship some 145 billion cubic metres (bcm) of gas to Europe this year, up from 142.9 bcm in 2009.

Kiev and Moscow have a long history of gas pricing disputes and they first came to world attention in January 2006, when supplies to western European customers were halted.

In March 2008, Russia halved supplies to Ukraine in another row, but quickly reached agreement to restore the flows without affecting European customers.

In January 2009, another pricing row between Moscow and Kiev resulted in a stoppage of Russian gas flows to Europe for about two weeks, further tarnishing Russia’s image as a reliable exporter and spurring a European quest for new suppliers.

In April, Russia and Ukraine clinched a new pricing deal, under which Ukraine would pay this year alone about $3 billion less than previously agreed.

Russia’s differences with Ukraine prompted Moscow to propose two pipelines, the North Stream and South Stream, running north and south of the EU bloc, which would bypass current transit states.

Disputes with Kiev took place amid badly strained relations between the Kremlin and Ukraine’s pro-Western former President Viktor Yushchenko.

Ties have dramatically improved since Yushchenko was replaced by Viktor Yanukovich, seen as much more loyal to Moscow. He swiftly agreed new gas and military base deals with the Kremlin after taking power earlier this year.


Around 20 percent, or more than 30 bcm a year, of the gas that Russia exports to Europe is shipped through Belarus, which pays around $180 per 1,000 cubic metres -- the lowest price by far for importers of the Russian gas.

Gazprom has traditionally charged Minsk the lowest price in what analysts say reflects Moscow’s desire to maintain an ally on its Western flank.

Low gas prices and financial help from Moscow are crucial for Belarussian President Alexander Lukashenko’s efforts to keep afloat the economy and to score high ratings ahead of presidential election next year.

The Druzhba (Friendship) pipeline also carries Russian oil through Ukraine and Belarus to Europe.

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

During a pricing dispute with Russia in January 2007, oil shipments through Belarus were halted for three days.

In January 2010, Russia and Belarus signed a new oil supply deal, resolving a month-long row during which they managed to avoid major supply cuts to Europe.


Poland is a major transit route for Russian oil and gas. Both the Druzhba and the Yamal-Europe gas pipeline pass through its territory.

Along with other transit states, Poland is opposed to the Nord Stream gas link, which will take Russian gas directly to Germany under the Baltic Sea.

The European Union’s largest ex-communist economy relies heavily on Russian gas as it imports about two-thirds of its annual needs from Russia.


Once Cold War foes, NATO member Turkey and Russia have in recent years deepened their ties by signing a raft of agreements from gas and oil pipelines to nuclear power plants.

In 2009, Russia won Ankara’s approval for the South Stream pipeline, a Moscow-backed gas pipeline to cross Turkish waters to Europe which is seen as a competitor to the European Union-backed Nabucco project.

Russia may also be looking to gain a stake of as much as 50 percent in a Turkish oil pipeline to be built by Italy's ENI ENI.MI and Turkey's Calik, which will join the Black Sea port of Samsun and Ceyhan in the Mediterranean. Russia has agreed to provide some of the oil for the pipeline.

Currently, the Blue Stream natural gas pipeline connects the Russian system to Turkey under the Black Sea.

compiled by Vladimir Soldatkin; editing by Keiron Henderson