July 31 (Bloomberg) -- Russia's Druzhba oil pipeline, which supplies an eighth of Europe's imports, resumed shipments after a leak cut exports and sent world oil prices higher.

The section of the Soviet-built pipeline that leaked near Bryansk, in western Russia, should reduce pumping by 80 percent to prevent further ruptures, the Natural Resources Ministry said today in an e-mailed statement. Lithuania's AB Mazeikiu Nafta cut output at its refinery after supplies through the link stopped July 29. Crude rose as high as $74 a barrel.

``Any disruption is very sensitive given the general nervousness of the market,'' said Valery Nesterov, an oil and gas analyst at Troika Dialog, a Moscow-based investment bank.

Continuing tension in the Middle East has increased concern about strains on the export network of Russia, the world's second-biggest oil supplier. European leaders said this month that Russia, which is planning a new $11.5 billion oil link to China, may not be investing enough in output and pipelines to ensure reliable supplies to the West.

Crude for September delivery jumped as much as $1.09 on the New York Mercantile Exchange. The contract traded at $73.95 a barrel at 1:19 p.m. in New York, up 1 percent.

Exports Fall

Druzhba's 3,800 kilometers of trunk pipelines can carry as much as 1.4 million barrels per day to Europe. Russian crude exports fell 1.1 percent last year to 5 million barrels a day because companies supplied more to domestic refineries amid higher taxes on crude shipped abroad.

Transneft said the leak in the Surazh district of the Bryansk region had been fixed, without giving details about oil supplies. Pumping resumed at 12:07 p.m. Moscow time, Viktor Beltsov, a spokesman at the Emergency Ministry, said by phone from the Russian capital. He declined to comment on oil supplies.

Sergei Grigoryev, deputy chief executive officer for pipeline operator OAO Transneft, wasn't available to comment.

``If the pressure is cut five times in the pipeline, oil transportation will also decline but possibly not at the same rate,'' said Dmitry Lukashov, an analyst at Aton Capital Group in Moscow. ``It's negative'' for oil exports.

Refinery Cut Off

Mazeikiu, which runs the only refinery in the Baltic states, is the main consumer of Russian crude that is pumped through the northernmost section of Druzhba.

The company's refinery can process as much as 160,000 barrels a day of crude. Mazeikiu's Butinge terminal is scheduled to load 130,000 barrels a day of crude for export in August, up from 106,000 a day.

Lithuania's government this year orchestrated the company's sale to Poland's PKN Orlen SA, snubbing Russian producers OAO Lukoil and OAO TNK-BP. Mazeikiu's previous owner, OAO Yukos Oil CO., was forced to sell the company after Russia filed $30 billion in back taxes against Yukos and jailed the Moscow-based company's chief executive officer, Mikhail Khodorkovsky.

Mazeikiu has faced supply disruptions since Lithuania regained independence from the Soviet Union in 1991.

Russian President Vladimir Putin is boosting state control over energy companies and building them into global competitors. U.S. Vice President Dick Cheney in May said in Vilnius that Russia was using energy to ``blackmail'' its neighbors.

Mazeikiu today couldn't say when supplies will be restored through Druzhba, which runs across the Belarus region of Polotsk on its way to the Baltic Sea coast.

``Pipeline repairs were concluded over the weekend and supplies of crude toward Novopolotsk have been renewed in small capacity,'' Mazeikiu said today in a statement.

The Druzhba system splits into two branches in the Bryansk region, one of which heads through Ukraine and Belarus to Poland and Germany, with the other linked to Lithuania, according to maps of the network on Transneft's Web site.

Environmental Damage

Russia's Natural Resources Ministry said the leak in the Surazh area in the west of the Bryansk region has damaged a ``significant area'' of forest, citing ministry officials. The ministry earlier said the leak may have spilled crude over at least 10 square kilometers, the ministry said in an e-mailed statement.

Transneft said the Emergency Ministry played down the incident.

The leak on July 29 spilled 48 cubic meters of crude, or about 300 barrels, that spread over 340 square meters of territory, Transneft said today on its Web site.

``This is a local level accident, which wasn't even included in our report for federal-level accidents,'' the Emergency Ministry's Beltsov said.

To contact the reporter on this story: Lucian Kim in Moscow at lkim3@bloomberg.net Milda Seputyte in Vilnius at mseputyte@bloomberg.net

Last Updated: July 31, 2006 13:22 EDT