Russia halts oil exports to Belarus, Europe hit

Russia, accusing Belarus of stealing oil from a major pipeline, has shut off crude exports to its western neighbour, halting supplies to Poland and Germany and threatening wider disruptions in central Europe.

Russia's pipeline monopoly Transneft said yesterday it was forced to act because Minsk had been siphoning off oil illegally from the Druzhba ('Friendship') pipeline system.

The oil supply cut was reminiscent of a stand-off last year between Russia and Ukraine that hit gas supplies to Europe. It escalates a tit-for-tat dispute between Russia and longtime ally Belarus, who have imposed punitive oil levies on each other.

The EU demanded an "urgent and detailed" explanation, a spokesman for Energy Commissioner Andris Piebalgs said. Europe is heavily reliant on energy powerhouse Russia for its oil and gas and extremely vulnerable to Russian supply cuts.

"The Belarussian side began taking transit oil as payment in kind for a new duty it had illegally imposed," Transneft Vice-President Sergei Grigoryev said.

"We therefore reduced transit supplies, equal to the amount being taken. We then reached the point where we had to stop supplies completely."

Belarus had until recently served as a loyal client state of Russia, and the two countries have discussed launching a common currency as a precursor to creating a political union.

But Moscow's recent decisions to impose duties on oil sales to its neighbour, double gas prices and ban sugar imports have led President Alexander Lukashenko to turn against his patron, Kremlin chief Vladimir Putin.

Mr Lukashenko - branded Europe's last dictator by the US - last week slapped a $45 per tonne transit fee on Russian oil pumped via Belarus.