Russia Warns on Fuel Supplies to Eastern Europe

Basically they are in dispute of payment. Russia will stop delivering oil Jan1 of 2010. Currently they supply 90% of E. Europe oil. That's got'a hurt! They have another pipeline that has the capability of supping 30% of demand. Even If they can get the other pipe line up and flowing there still missing 70% of demand. 

Its interesting to me, because what would happen when we have a payment dispute or if our solvency were in question. For that mater one state within the us could question another state. If California were cut-off would they just deal with it, or would violence erupt and spill over to nearby states causing a domino-effect.

As for the country as a hole our Dollar is the standard of trade for opec. so to call our Countries solvency in question will be difficult but possible. I think OPEC would love to dump the Dollar but the world pressure is to great, to allow it. Right now China Is over vested in the US. The others are hoping we will pull out of recession (depression) and pull them out with us. If we continue to sink and its evident we are going to pull others down with us, They will cut the cord. If the dollar gets dropped our country goes MAD MAX by weeks end.............Essential every dollar is a NSF check from a dead man.

By LEOS ROUSEK

PRAGUE -- Russia has warned the European Union it may cut its crude-oil supplies to Slovakia, the Czech Republic and Hungary due to demands by Ukraine for higher transit fees, Slovak Prime Minister Robert Fico said Monday.
But experts said Europe appeared better prepared than last time this occurred. Crucially, the supplies involve crude oil -- and not natural gas – and the three affected countries have enough reserves, at least for three months or so.

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"Ukraine has asked for an increase of transit payments by Russia for [crude oil] shipments as of next year," Mr. Fico told a news conference. "Therefore Russia has warned the EU and us about possible disruptions of crude oil shipments from as early as Jan. 1."
Hungarian oil and gas company MOL Nyrt said it received a notice from Russian oil pipeline operator OAO Transneft that its transit spat with Ukraine's state oil pipeline operator Ukrtransnafta could lead to a cut of oil supplies to Eastern Europe Jan. 1. The spat affected the Druzhba oil pipeline.
The possible crude-oil-supply disruption is "due to [a] payments dispute between these two countries," Mr. Fico said. Last winter, supplies were also cut off when Russia shut down natural-gas shipments to the European Union via Ukraine.
"But unlike the gas crisis of last January, any possible oil shipment disruptions can be covered by [crude oil] supplies via alternative routes," Mr. Fico said. Russian crude-oil supplies account for over 90% of Slovakia's domestic demand.
The Eastern European country can get alternative oil supplies other than Russian shipments via rail, Slovak Industry Minister Lubomir Jahnatek said. Slovakia has crude oil and fuel reserves to cover more than 94 days of its domestic demand.
The Czech Republic has also prepared itself for the risk of an oil-supply cut from Russia by maintaining reserves that can cover the local demand for more than 90 days, Czech Industry Ministry spokesman Tomas Bartovsky said. "We went through similar situations before in 2008 and 2007 and therefore we're prepared," Mr. Bartovsky said.
The Czechs are less vulnerable than their Slovak neighbors, since Czech oil refineries can be switched fully to crude-oil supplies from the country's alternative pipeline, known as IKL. That pipeline connects the Czech Republic with the Adriatic Sea port of Trieste in northern Italy and delivers crude oil from the Persian Gulf region. The IKL pipeline covers 30% of local demand.
"IKL is capable of covering the entire local demand if necessary but it would require securing shipment slot contracts in the pipeline system," Mr. Bartovsky said, adding that ramping up the IKL oil shipments would take some time.
Hungary's crude reserves are sufficient to supply the country for 90 days of average consumption, MOL said in a release. "MOL is prepared to handle the situation; following a possible halt of supplies via the Druzhba pipeline, the reverse of flows on the Adriatic pipeline would become our prime task, which would take some 25-30 days," MOL said. "Even if the row escalated between Russia and the Ukraine, Hungary's crude supply wouldn't be at threat," MOL added.
For several months from late spring through late summer of 2008, Russia disrupted its oil shipments to the Czech Republic and Slovakia over a dispute concerning transit fees between Moscow and Kiev. "However, unlike last year's natural gas-shipment crises, any possible crude-oil-shipment disruptions are more easily manageable and there is no need for concerns over insufficient fuel supplies on [the Czech] market," Mr. Bartovsky said.
Meanwhile, Russian Prime Minister Vladimir Putin opened a new oil export terminal in the Far Eastern port of Kozmino to supply crude oil to Asia.
—Margit Feher in Budapest contributed to this article. Write to Leos Rousek at leos.rousek@dowjones.com