Russia cuts off Belarus

Will it be a repeat of 2007?

A new year, a new case of Russia cutting off supplies to Europe. This time around however, it is not Ukraine being denied gas, but Belarus and its oil supplies.

After an agreement on crude oil export tariffs expired on New Year's Eve, the two countries have failed to reach a new accord leading to yet another energy pricing dispute and another inevitable midwinter fuel shut-off on the continent.

The incident has added fuel (no pun intended) to the debate that Europe is overly reliant on Russian energy supplies as was the case last year when the halt in gas shipments to Europe saw wholesale gas prices soar and millions of households face the winter without heat for several days.

History repeating itself

It is not the first time Russia has cut off Belarus. In 2007, Russia severed oil supplies to the country after they, again, failed to reach an agreement on prices. Back then, other countries were also affected with supplies to major refineries in Germany and Poland cut. As such, the two countries are watching this dispute very carefully.

Approximately a fifth of Europe's gas comes from Russia via Ukraine and Belarus. If the stand-off continues, it has been estimated that two Belarussian refineries - Naftan and Mozyr - have enough stockpiled crude to continue operations for about a week.

Russian officials in Minsk have accused Belarus of threatening to raise the transit fee on Russian oil supplies to Poland and Germany tenfold in retaliation against Russian demands. This could potentially disrupt flows to Europe even more, as only a small portion of refined products stay inside Belarus once delivered via the Druzhba pipeline.

In a statement, Russian Ministry of Energy spokeswoman, Irina F. Yesipova, said the transit flow currently en route to Western markets, a supply big enough that its disruption could raise global oil prices, had not been, and would not be halted. She declined to comment on the domestic supplies in Belarus.

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