UPDATE 1-Russia's Safmar redirects oil to Belarus -traders

Safmar, the Russian group that controls the assets of tycoon Mikhail Gutseriyev's family, has redirected some of its oil exports to increase supplies to Belarus in its capacity as the country's sole source of Russian oil, traders said. Russia suspended oil supplies to Belarus on Jan. 1 in a dispute over supply contract terms between Moscow and Minsk. Two Safmar-owned Russian companies, Russneft and Neftisa, restored some supplies late on Jan. 4.

In total, Russneft and Neftisa have agreed to supply Belarus with 650,000 tonnes of oil via pipelines and another 100,000 tonnes by rail in January. In addition to the oil pipeline flows, 38,000 tonnes have moved by rail since the start of the month, two trading sources said earlier on Monday.

The 750,000 tonnes is about half of the roughly 1.5 million tonnes of Russian oil Belarus consumes each month, with the sources saying that Russneft and Neftisa were stepping in to maintain minimum levels of oil refining in the country. The two nations' dispute over oil supply comes even as Moscow seeks deeper political and economic integration with its former Soviet neighbor.

Three other trading sources said that to increase supplies to Belarus, with which Gutseriyev has strong ties, Russneft has canceled one cargo of 100,000 tonnes for Jan. 27-28 loading from the Baltic Sea port of Ust-Luga. Russia's Surgutneftegaz is stepping in to replace Russneft's cargo, tendering the same volume for Jan. 27-28, the three traders said.

In a statement to Reuters last week, Safmar said that its oil companies produce a total of 18 million tonnes of oil a year, enabling it to ensure supplies both to the domestic market and Belarus in the "full amount according to a schedule approved by the Russian Energy Ministry". On Monday Safmar declined to comment on specific oil volumes delivered to Belarus but said that "adjustments to the export schedule are possible". Russian Railways declined to comment.

Other Russian oil companies that used to ship oil to Belarus before this year continue to seek agreement on new supply terms with state-run Belneftekhim, which controls Belarus's two refineries. Spats between Moscow and Minsk have previously led to the disruption of supplies to Europe, which obtains 10% of its oil from Russia via Belarus's Druzhba pipeline transit link. Transit along the pipeline has continued uninterrupted so far this year.

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