The Russia–Belarus energy dispute began when Russian state-owned gas supplier Gazprom demanded an increase in gas prices paid by Belarus, a country which has been closely allied with Moscow and forms a loose union state with Russia. It escalated on 8 January 2007, when the Russian state-owned pipeline company Transneft stopped pumping oil into the Druzhba pipeline which runs through Belarus because Belarus was siphoning the oil off the pipe without mutual agreement. On 10 January, Transneft resumed oil exports through the pipeline after Belarus ended the tariff that sparked the shutdown, despite differing messages from the parties on the state of negotiations. The Druzhba pipeline, the world's longest, supplies around 20% of Germany's oil. It also supplies oil to Poland, Ukraine, Slovakia, the Czech Republic, and Hungary. Background For a long time, the gas price for most of the former USSR republics was significantly lower than for the Western European countries. In 2006 Belarus paid only $46 per 1000 m³, a fraction compared to $290 per 1000 m³ paid by Germany. The annual Russian subsidies to the Belarusian economy were around $4 billion, as Russian president Vladimir Putin said on 9 January 2007. In 2006 Russia announced a higher price for 2007. After Alexander Lukashenko, President of Belarus, rejected this price change, and without a new treaty, Gazprom threatened to cut gas supplies to Belarus from 10:00 MSK on 1 January 2007. Both sides finally agreed on the following terms: Russian gas to be sold to Belarus for $100 per 1000 m³ (compared to Gazprom's original request of $200 per 1000 m³) Belarus to sell Gazprom 50% of its national gas supplier Beltransgaz for the maximal price of $2.5 billion Gas prices for Belarus to gradually rise to the European market price by 2011 Belarus's transit fees for Russian gas to increase by around 70% Another part of the energy dispute is the dispute over oil. In 1995, Russia and Belarus agreed that no customs would be imposed on oil exported to Belarus. In exchange, the revenues from this oil processed in Belarus would be shared by 15% for Belarus and 85% for Russia. In 2001, Belarus unilaterally canceled this agreement while Russia continued its duty-free exports. Lukashenko's state kept all the revenues, and many Russian oil companies moved their processing capacities to Belarus. On this arrangement, Russia also lost billions of dollars annually. Belarus imposed a tariff of