Russia will start negotiations with Belarus only after the latter has lifted the transit duty and resumed oil transit, Russian Economic Development and Trade Minister German Gref said at a press conference following a meeting with Belarus Deputy Prime Minister Andrei Kobyakov. Gref named the demand unconditional. The Belarus delegation led by Deputy Prime Minister Kobyakov has still not left Moscow, and it was suggested that the talks could continue on Wednesday.
Our view: It seems that coming to a mutual agreement between Russia and Belarus is not the matter of a few days. However, since the main financial burden stemming from the pipeline shutdown will fall on both Russia (lower exports and buyers' claims on state-owned pipeline operator Transneft) and Belarus (lack of alternative energy supply and lost transit fees), we believe that it is in the interests of both sides to solve the dispute as soon as possible. We expect the share prices of CEE Oils to be under moderate pressure until the deliveries are resumed.