RUSSIAN SUSPENDS OIL EXPORTS VIA UKRAINE.

According to the heads of the Ukrainian State Committee for Oil and Gas Industries and the Druzhba pipeline system, Russia suspended transport of crude oil to Central Europe through Ukraine January 1. Moscow’s decision came without warning in the midst of Russian-Ukrainian negotiations on transit fees for the oil. The suspension contradicts Moscow’s own proposal to continue oil exports via Ukraine pending agreement on increased transit fees. The Ukrainian officials said yesterday that some 20 Russian oil-producing and exporting firms had agreed to the moderate rise in Ukrainian fees. Russian officials, who declined to be named, said Ukraine had raised transit fees unilaterally January 1 without awaiting the outcome of the negotiations. (18)

Ukraine is the principal transit country for Russian oil exports to Central and Western Europe. The oil is transported via the Soviet-era Druzhba ("Friendship") pipeline system, originally built to convey oil to former communist countries. Ukraine and Russia agreed January 1995 to set transit fees at $4.53 per ton per kilometer last year and to renegotiate for 1996. Ukraine is now asking $5.20, even though it calculates actual cost to be $7.20. Intended recipients of the oil do not seem to be facing shortages as a result of the suspension. Czech officials, for example, said yesterday that their country had ample oil stocks.

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