Belarus president threatens to take transit oil from Russia-EU pipeline amid dispute with Moscow

Belarus president threatens to take transit oil from Russia-EU pipeline amid dispute with Moscow
Belarusian President Alexander Lukashenko, siphon off Russia's transit oil as part of his ongoing energy dispute with Russia / wiki
By bne IntelliNews February 17, 2020

Belarusian President Alexander Lukashenko has pledged to siphon off Russia's transit oil from the Russia-EU oil pipeline Druzhba, if Moscow fails to supply the "necessary volume" of oil in February.

"If Russia fails to deliver the necessary amount of oil [...] we start taking oil from the transit pipeline, too," Lukashenko's media office quoted him as saying on February 14. He added that Russia had supplied only 0.5mn tonnes in January, or 1.5mn tonnes less than expected.

The Druzhba pipeline splits into two routes in Belarus - a northern leg runs to Poland and Germany, and a southern leg to Ukraine, the Czech Republic, Hungary and Slovakia.

Belarus faces shortages of Russian oil for its two refineries, as Moscow halted crude supplies to Belarus on January 1 after a contract expired, and the two countries are in negotiations over a new agreement. Minsk said later in January that it had secured a temporary limited solution on shipment from Russian oligarch Mikhail Gutseriev's company Safmar, without paying a premium. In past years Belarus bought oil on terms similar to those for Russian independent refineries, which involved a small premium.

On January 24, Lukashenko pledged to purchase crude oil "in Americas, Saudi Arabia, UAE" following Moscow's refusal to deliver oil to the post-Soviet nation in 2020 on Minsk's terms.

"As much as 70mn tonnes of oil is pumped via Belarus for Belarus and for the West. And they have no problems. We properly and honestly pump this oil. Do you remember polluted oil in summer? Russia has yet to pay for it, although equipment at our oil refineries [...] has been damaged as well as the oil pipeline Druzhba. This is why if [Russia] fails to deliver in February, we will take oil [from the pipeline] to get 2mn tonnes," Lukashenko added.

In July, Minsk said that the exports of Belarusian state-owned oil and petroleum conglomerate Belneftekhim shrank by $800mn in 2019 compared to the previous year due to the crisis over the poor-quality oil supplies from Russia.

In May, Belarusian Deputy Prime Minister Igor Lyashenkon said Minsk was going to seek compensation for the direct and indirect losses caused by the poor-quality oil.

"We've talked to [our Russian] colleagues. Two kinds of compensations are involved: direct losses of enterprises and indirect losses.The direct losses are simple to understand - broken equipment," he said. "Competent groups are working on it. The Russian side has assured us that Belarus will get compensations for documented expenses. Naturally, we've raised the issue of indirect losses, too."

During the first week of the crisis, Minsk reduced the workload of Mozyr oil refinery by around 40%, and of Naftan refinery by around 50%. Belarus estimates its revenue losses at around $100mn as a result of Russia's supplies of low-quality oil, according to Belneftekhim. Belarus was also forced to suspend exports of light oil products to Ukraine, Poland and the Baltic states.