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Turkey furthers Ukraine's dependence on Russian fuel supplies

Oil tankers can pose a threat to Bosporus's environment.

Turkey denied Ukraine's request to allow the passage of Ukrainian oil tankers through the Bosporus, said Ukrainian Economic Minister Sergei Terekhin. The Turkish authorities cited possible hazards to the environment of the Black Sea as official reasons behind the decision.

According to the Turkish government, the Bosporus and the Dardanelles turned into a dangerous transport corridor for carrying oil and gas. The situation threatens the environment of the region and millions of people living in the coastal areas.

According to experts with Platt's Crude Oil Marketwire, the ban imposed by Turkey on Ukrainian tankers will effectively nullify all the efforts of the new Ukrainian government to reduce Ukraine's dependence on Russian oil supplies. Russian fuel exports account for about 85% of all oil and gas imported by Ukraine these days. The latest developments shed a new light on the dispute between the Russian oil companies and the Ukrainian government. On April 20th Ukrainian Antitrust Committee opened criminal proceedings against the Russian oil companies for taking coordinated steps aimed at reducing competition. In other words, the Ukrainian government in the person of Prime Minister Yulia Tymoshenko accused the Russian oil companies of setting unreasonably high prices on oil products sold on the Ukrainian market.

The majority of analysts believe that the actions of the Ukrainian government are wrong and harmful. They point out that Ukraine's economy remains firmly implanted in the Russian economic system. Ukraine's metallurgical and machine building industries are Russia-oriented. Ukraine is paid a few million dollars' worth of transportation fees by foreign companies for pumping oil and gas via its territory.

But the Ukrainian government does not seem to share the view. The Ukrainian Ministry of Economy and the Russian Ministry of Fuel and Energy agreed to extend the cap on wholesale prices for diesel fuel and gasoline from May 1st to June 1st. Russian companies warned the government that such steps could lead to fuel shortages in Russia. However, Ukrainian Prime Minister Tymoshenko seems to have got the upper hand. TNK-BP said it would sell diesel fuel and oil products in line with the Memorandum for the Ukrainian Oil Products Market Price Stabilization. In any case, Russian oil companies are planning to use market prices for selling fuel and lubes to Ukraine, any claims to be settled in court.