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Minsk, Moscow Agree On Oil Transit Tariff Hike As Compensation For Tainted Oil

Belarusian state-owned petrochemical company Belneftekhim. (file photo)
Belarusian state-owned petrochemical company Belneftekhim. (file photo)

Belarus will raise the oil transit tariff by 3.7 percent after its state petrochemical firm Belneftekhim agreed the price increase with Moscow, the company said in a statement.

Set for September 1, the tariff raise is meant to compensate for a reduction in flows mostly to Europe linked to oil contamination in April.

After the contamination became known, Poland, Germany, and the Czech Republic temporarily halted imports of Russian crude oil over quality concerns.

As a result, Minsk lost transit revenue.

Russia is almost the sole supplier of oil and gas to Belarus and owns the Druzhba pipeline through which Moscow sends a quarter of its oil exports to Ukraine, Belarus, and the European Union.

Two Belarusian refineries also generate much of the country's income. Minsk currently transits 39 billion cubic meters (bcm) of Russian gas to Europe and buys around 20 bcm of Russian gas a year.

Russia and Belarus have argued over Russian oil and gas prices to Minsk and about transit supplies through Belarus for 15 years. Some squabbles have led to cutoffs or constrained supplies.

However, once the Russian Nord Stream 2 pipeline project gets commissioned next year, Moscow will gain more leverage and be able to circumvent Belarus and Ukraine as transit countries given the two pipelines' 55-bcm capacity.

Based on reporting by AP