Belarus has restarted the flow of Russian crude oil across its territory, the operator of a major transit pipeline said on Wednesday, after reaching a compromise with Moscow to end a three-day stoppage. The resumption came after the telephone conversation between two presidents Mr. Putin and Mr. Lukashenko and hours after Belarus scrapped an oil transit duty it imposed last week on shipments of crude through the Druzhba pipeline. The pumping of oil has started to Poland, Germany, Ukraine, Slovakia, the Czech Republic and Hungary at a full capacity.
Our view: This is certainly positive news for CEE oils. Since the supply stoppage was relatively short-lived, we do not expect any major financial impact on companies' earnings in 1Q07. However the incident pointed out the vulnerability of CEE oils. In our view among CEE oils MOL could suffer the most from supply interruptions via the Druzhba pipeline: after 3-5 days of outage of the pipeline MOL's both refineries should substantially lower capacity utilization rate (to 70-80% from a normal level of 95%). This is due to the fact that MOL's refineries are more export oriented than the others and strategic reserves of the governments are only available to secure supply on the domestic market and not for exports.