Russia's reputation 'damaged' by oil dispute

Russia’s trade minister acknowledged today that his country’s reputation suffered as a result of the oil duty dispute with Belarus that disrupted supplies to Europe.

German Gref, who took part in top-level negotiations that concluded late last night, said it will take years for Russia to overcome European fears about Moscow’s dependability as an energy supplier, which had already been damaged by last year’s price dispute with Ukraine. That dispute also resulted in temporary shortages of Russian gas to European customers.

Russia on Monday stopped shipping oil to Europe through a major pipeline that crosses Belarus. Moscow accused Belarus of siphoning off oil in lieu of a transit fee it had imposed in response to a duty Russia placed on oil exports to Belarus. Germany, Poland and other European countries saw a disruption in oil supplies as a result.

Russian oil shipments resumed early Thursday after Belarus lifted the transit fee, and the two countries agreed on Friday to lower the Russian export duty by about 70%. They also agreed that Russia would get the lion’s share of profits from refined oil products Belarus makes using Russian oil and then sells to Europe.

“The (reputation) that we enjoyed has been undermined to some degree, and it must be repaired. And how can you measure damage to one’s reputation?” said Gref, Russia’s trade and economic development minister. “We perfectly understand the damage that we have suffered.”

He asserted that European consumers realise that Russia was not at fault for the disruption and that the country’s image should improve in the coming years if Russia avoids such incidents and creates more alternative supply routes for oil and gas.

“They are able to understand that it was not our fault that the situation was created and that we should create a position so that there will be no more such precedents,” he said.

In Minsk, meanwhile, Belarusian vice president Andrei Kobyakov said that the agreement was a fair deal, even though the country stands to sacrifice billions in revenues from refined oil products. He also said the government did not expect domestic consumer or producer prices to rise.

“The agreement was balanced. This was not a concession, it was the civilised way to resolve the question. This agreement is the most fair and it will prevent escalation,” Kobakov told reporters.

“The deal will not bring serious, or tremendous, change to Belarus. We don’t expect any damage for (Belarusian) oil companies,” he said.