Putin Seeks Oil Output Cut From Cabinet

A part of the pipeline "Druzhba" located in the Belarusian town of Mozyr, some 300 km (188 miles) southeast of Minsk, Tuesday, Jan. 9, 2007. Talks between Russia and Belarus to resolve a trade row that has led Moscow to halt oil supplies to several EU nations via Belarus have not been able to start, Belarusian negotiators said Tuesday, calling for unconditional negotiations. (AP Photo/Sergei Grits) (Sergei Grits - AP)

Khristenko also said Russia could cope with the shutdown for now, but noted that other pipelines were filled to capacity and that Russia could try to compensate for the shortfall only by shipping more oil by railways and river transport.

"If these measures aren't enough, it could be necessary to reduce oil output," he told a news conference.

Russia would also try to expand its pipeline network in the northwest and the Baltics from 75 million tons annually to 110 million tons over the next two to three years, he said. And officials would try to speed up construction of new pipelines in Eastern Siberia and under the Baltic Sea _ outlets that would give Russian oil exports more access to foreign markets.

Belarusian experts say the country has at most enough oil reserves to last a week, although the government refuses to disclose such statistics. The country's inefficient, Soviet-style state-dominated economy depends heavily on subsidized Russian energy.

"Belarus' reserves of cheap oil will last a few days, a week at most. After that it will have to buy oil (at a high price) taking into account Russian export duties," said independent economist Yaroslav Romanchuk.

Natalia Leshchenko, an analyst from the Global Insight think-tank, said the Kremlin had "reduced itself to bullying tactics."

"Russia takes the Belarusian leader so seriously that it is ready to face the indignation of five European states for the sake of bringing him into obedience," she said in an e-mail.

The disruption of Russian oil to Europe came a year after a price dispute with Ukraine led to a natural gas cutoff for Kiev and brief shortages of Russian gas pumped to several EU nations. The incident alarmed European officials and lead to calls for energy diversification. Russia currently supplies a quarter of the EU's oil and over two-fifths of its gas consumption.

In unusually harsh language, EU Commission President Jose Manuel Barroso and German Chancellor Angela Merkel said Tuesday that it was "not acceptable" for energy transit or supplier countries to halt deliveries without consultation.

Merkel also said that Germany must find ways to cut its dependence on a single source of oil and gas, from conservation to renewable energy and must take a fresh look at nuclear power.

The 2,500-mile-long pipeline pumps an average of 1.2 million barrels a day to eastern and central Europe. The pipeline has two branches, one of which runs to Poland and Germany, the other to Ukraine, Hungary, Slovakia and the Czech Republic.

Poland relies on the pipeline for around 96 percent of its oil consumption. Russia is Germany's top supplier of oil, supplying roughly a third of its imports. About two-thirds of Russian oil for German consumers comes through the Druzhba pipeline.

The dispute came days after Belarus and Russia reached a last-ditch agreement on a doubling of gas prices that avoided a New Year's cutoff of natural gas for Belarusian consumers and potential supply shortages in Western Europe.

But the two countries are now in conflict over oil duties, with Russia determined to stop Belarus from re-exporting petroleum products that were refined from Russian oil bought cheaply under the previous duty-free regime.

Russia and Belarus have been close allies, with Moscow relying on Minsk as a military buffer between it and NATO. In the mid-1990s they signed a loose union treaty. But analysts say the Kremlin has distanced itself from Lukashenko since he refused a proposal to incorporate Belarus into Russia.