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Russia-Belarus Oil Row May Escalate To Cuts Again

Belarus's Yamal-Europe gas transfer station near Nesvizh

Belarus's Yamal-Europe gas transfer station near Nesvizh

MOSCOW/MINSK (Reuters) -- Russia has warned it could again reduce oil flows to Belarus due to an unresolved pricing dispute, which has already sparked fears of supplies cuts to Europe and pushed oil prices up.

Russia had briefly halted supplies to the two refineries in Belarus, Naftan and Mozyr, after the two sides failed to clinch a deal by New Year. Flows restarted on January 3.

Russian oil flows to Mozyr could be suspended again within 24 hours because oil firms are unwilling to confirm volumes due to the dragging pricing dispute, Russia's pipeline monopoly said.

"[Oil firms have] confirmed volumes for Mozyr for one day. Usually [oil firms] confirm volumes three days in advance," Transneft's spokesman Igor Dyomin told Reuters.

A source close to the refinery management dismissed Transneft's comments.

"That's not totally true. I won't tell you about the exact volumes, but it's not less than for a week", he told Reuters.

The spokesman for the operator of the world's biggest oil pipeline network said that the other refinery -- Naftan - had Russian oil supplies confirmed for a week.

He also assured that Russian crude deliveries through Belarus to Europe were safe.

"Transit supplies are continuing according to the initial schedule," he said.

Russia allowed Belarus to import oil last year at only 35.6 percent of the current crude export tariff.

Russian Prime Minister Vladimir Putin has said Belarus can now buy 6 million tons of Russian oil, for domestic needs only, duty-free.

But while Minsk argues all Russian oil should be duty-free, Moscow now wants payment in full for about 14.5 million tons a year of crude that is mostly refined and re-exported.

Russia has set its January oil export duty at $267 per ton. It will rise in February to $271-274.