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To: Alan Whirlwind who wrote (32648)	4/27/1999 5:37:00 PM
From: lorne	Read Replies (2) \| Respond to of 116770

NATO effectively scraps ban on Russian oil In MOSCOW story "ANALYSIS-NATO effectively scraps ban on Russian oil", please read in first paragraph...on Tuesday...instead of...on Friday (corrects date). A corrected repetition follows. By Sebastian Alison MOSCOW, April 27 (Reuters) - NATO has effectively scrapped its attempt to impose an embargo on Russian crude oil and oil products entering Yugoslavia in the face of fierce Russian protests, analysts said on Tuesday. But while the Russian government insists NATO has no right to impose a ban, analysts say it may well be in the commercial interests of Russian oil companies to respect the embargo and keep their products out of Serbia. NATO imposed an oil embargo on its members on Friday, hours after the European Union did the same. It also made clear that it would try to extend the embargo to other countries, including Russia, the largest single oil supplier to Serbia last year. Russian Foreign Minister Igor Ivanov on Tuesday repeated his rejection of such a ban. "Only the U.N. Security Council can take a decision which binds all states in the form of any sanctions or embargoes, and the decisions taken by NATO or the European Union and for that matter by any regional organisation are valid only for their members," he told a news briefing. "Consequently these decisions have no legal binding force on Russia." Ivanov met U.S. Deputy Secretary of State Strobe Talbott in Moscow on Tuesday, but Talbott declined to answer any questions on the oil issue. NATO has already started backtracking. General Klaus Naumann, who commands NATO's Military Committee, said on Monday that NATO had no authority to use force to stop oil shipments to Yugoslavia. Canadian Defence Minister Art Eggleton said later on Monday that NATO had no intention of mounting a naval blockade against Russian oil shipments to Yugoslavia. Analysts said the Western alliance would want to tread carefully where Russia was concerned. "It's not an effective embargo. There's a desire to be very sensitive to Russia and not to stop and turn back Russian ships," said Stephen O'Sullivan, head of research at United Financial Group in Moscow. "There's also a desire to keep Russia onside as well," he added, pointing out that NATO sees Russia as having a vital role to play in any peace settlement over Kosovo. Ruslan Nickolov, analyst at Nomura Securities, agreed NATO had effectively exempted Russia from the embargo. "It looks like that to me. Perhaps (NATO has decided) this is not the most essential element in the campaign, and it's probably not worth risking further confrontation," he said. But O'Sullivan said that while the Russian government has said oil deliveries to Yugoslavia would carry on under existing contractual terms, individual Russian companies would probably be extremely sensitive to NATO's position. "There's a commercial pressure rather than a political pressure for Russian companies not to tangle with NATO," he said. Russian companies such as LUKoil , the country's largest, are looking to expand in central and eastern Europe, he said, adding that it would be keen to maintain good relations with potential lenders, most of whom are NATO or EU members. "They're not going to break the embargo if it means access to capital markets is restricted in 18 months' time," he said. Instead, he said, Serbia was likely to import most of its oil products -- crude oil is of no use to Serbia as its refineries have been destroyed -- through Romania and Bulgaria, even though those governments are committed to the embargo. "Individuals in those countries are entrepreneurs and there are large profits to be made. It's only natural for a black market to develop," O'Sullivan said. Although Russia was the largest single oil supplier to Yugoslavia last year, the amounts it supplied were tiny -- around 12,000 barrels per day of crude and around 2,000 barrels per day of fuel oil. Russia is the third largest oil producer in the world, and exports of oil typically account for around half of all Russian hard currency export earnings. reuters.com