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Russia oil pipeline to Poland, Germany halted - extended

Oil supplies to Poland and Germany through Russia's Druzhba pipeline were halted overnight but the cause was unknown, Polish officials said on Monday.

„Oil supplies via the Druzhba pipeline to Poland and Germany were halted overnight. We sent a letter to Belarus asking for explanations. At this point we do not know the reason why the supplies were stopped,” said Tomasz Zakrzewski, a spokesman for the Polish pipeline operator PERN. The Polish economy ministry said that there were some problems with oil supplies through the Russian Druzhba („Friendship”) pipeline. Polish private television TVN24 reported earlier that the problems were related to a recent energy pricing dispute between Russia and Belarus. „There are problems with oil supplies through the pipeline to Poland,” said an economy ministry official. The Druzhba pipeline to Central Europe is one of the world's biggest by capacity and length. Russia is the world's second largest oil exporter and supplies around a fifth of Germany's needs. On Thursday the Kremlin said that Russia had received official notification that Belarus had imposed a transit duty on its oil exports, but said it did not expect an escalating trade row to disrupt crude shipments to Europe. The Druzhba pipeline splits into two spurs with the bigger one, the northern leg, going to Poland and to Germany.

Poland was trying to break its dependence on Russian energy well before a confrontation between Belarus and Russia interrupted its supply of oil yesterday. The flow of Russian oil to Poland remained suspended today, the Polish Economy Ministry said, after Russia halted supplies to Belarus in a dispute over prices. Each of Poland's two refiners, PKN Orlen and Grupa Lotos, imports more than 90% of the oil it uses from Russia. Poland also gets almost half its natural gas from Russia. Now it's looking for alternatives as close as the North Sea and as far away as Iraq. „We don't want to rely on a single energy supplier,” Piotr Naimski, a deputy minister of the economy, said in an interview in Warsaw on January 4. „That's why we are working on two projects: building a gas pipeline from the North Sea and the construction of a liquefied-gas terminal.” The dispute between Russia and Belarus is just the latest confrontation to halt supplies of Russian energy. Last year, Russia' natural-gas-export monopoly, OAO Gazprom, shut off gas to Ukraine in another dispute over prices, causing shortages in several European countries. Since then, Russia has tightened its grip on the country's energy industry, and critics say there's a growing threat it will use its oil and gas as a political weapon. „Political reasons are standing behind Russia's energy policy,” said Olena Kyrylenko, an analyst at KBC Groep NV in Budapest. „I would understand why Poland wants to decrease the dependence on Russia.”

Poland is already in talks with Gassco, Norway's gas distribution company, and Energinet, Denmark's gas and power grid operator, to build the link from Scandinavia. It wants to get as much as 3 billion cubic meters of gas from the North Sea in 2011. This quarter, Polskie Gornictwo Naftowe i Gazownictwo SA, Poland's gas monopoly, will decide how to finance an investment of about €350 million ($455 million) in an LNG terminal. In the Q3, the company may seek bids for construction and select the fuel supplier. „We check every possibility, we look for suppliers in such countries as Algeria, Qatar, and several others,” Naimski said. Liquefied natural gas is gas cooled to a liquid so it can be shipped in tankers to a terminal that turns it back into gas. Building a terminal would help Poland bypass the pipelines through Ukraine and Belarus that transport Russia's gas. The construction of the terminal, the first on the Baltic Sea, would begin at the end of 2007 and last until 2011. It could eventually handle shipments of 7.5 billion cubic meters of natural gas a year, the Warsaw-based company said in December.

Poland also wants to benefit from its military presence in Iraq, where it has about 900 troops, involved mainly in training the fledgling Iraqi military. Eighteen Polish soldiers have been killed in Iraq since the force deployed in August 2003, as well as four civilians. It's pushing for increased cooperation and access to Iraqi oil reserves, the world's third-largest. „The economy ministry will soon sign a memorandum of understanding with its Iraqi counterpart,” Naimski said. „From the strategic point of view, Iraq is a country with enormous resources. It would be good to be able to cooperate.” Poland may also build a nuclear power plant, to get electric energy and heat from sources other than coal, Naimski said. It's already seeking a 25% stake in a proposed nuclear power plant in Lithuania. That plant, a €4 billion project involving Lithuania, Latvia and Estonia, would replace an existing plant at Ignalina, in eastern Lithuania, the only nuclear plant in the Baltic region. Lithuania will close that plant in 2009 to meet European Union commitments. (today.reuters.com, Bloomberg)