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Last Updated: Tuesday, 9 January 2007, 13:20 GMT
Q&A: Russian oil row
Moscow and Belarus are embroiled in an trade row over energy supplies, which has led to the key Druzhba pipeline being cut off.

But why is the dispute causing so much fuss in Europe?


What is the row about?

At first glance it seems to be a row over whether or not Belarus can charge Russia for transporting oil across its territories.

But under the surface, the dispute is evidence that the relationship between the two sides is becoming increasingly sour.

Worker at refinery in Hungary
The dispute has brought European energy needs into sharp focus

Commentators claim that new duties imposed on Russian oil by Belarus were actually in retaliation for Russia imposing a huge increase in the price of gas supplied to its traditional ally.

Critics have also accused Moscow of using its energy muscle to re-impose its will on what is sometimes called Russia's "near abroad" - the countries that were once part of the Soviet Union.

Haven't we been here before?

Last year, gas supplies to a number of European countries were disrupted when a gas-pricing row broke out between Ukraine and Russia.

Ukraine, and some Western commentators, said Russia was trying to punish it for attempting to withdraw from Moscow's sphere of influence and to strengthen ties with the European Union and Nato.

Russia rejected this allegation, saying it simply wanted a proper market price for its gas.

Within hours of the cut to Ukraine's supplies, other countries began reporting a drop in pressure in their pipelines. Austria, France, Germany, Hungary, Italy, Poland and Slovakia all reported drops of about 30%.

What does this mean for Europe?

Russia supplies close to 30% of all Europe's oil, while oil group Opec accounts for about 45%, the Petroleum Economist magazine said.

According to the magazine, 82% of all Russian oil exports go to Europe, and half of those go through Belarus.

Currently, the EU says there are enough strategic stockpiles to maintain European supplies in the short term.

But some countries may be harder hit than others if the dispute is a lengthy one.

Poland relies on the Druzhba pipeline for more than 70% of its oil supplies, while Finland gets 79%, Slovakia 82% and Hungary 89.5%.

Why has Russia raised its energy prices?

Its economy is heavily reliant on energy exports - as well as getting almost a third of its oil from Russia, Europe relies on Russia for 40% of its gas imports.

Russia said it altered its pricing policy in recent years to cut back on subsidies to former Soviet Union countries and get a fairer market price for the goods it offers.

What is Europe doing?

Already German Chancellor Angela Merkel has attacked Russia for cutting oil supplies through the so-called Friendship pipeline saying such moves were "unacceptable".

She has also said that the current problem highlights the need for Europe to diversify its energy sources.

Analysts said that Russia's timing could backfire and may end up damaging relations with European partners as its decision to stop pumping oil through Belarus came just hours ahead of a key round of EU talks on energy.


SEE ALSO
Merkel attacks Russian oil cuts
09 Jan 07 |  Business
Russia oil row hits Europe supply
08 Jan 07 |  Business
Russia rues Belarus oil tax move
04 Jan 07 |  Business
Belarus hits Russia with oil tax
03 Jan 07 |  Business

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