Belarus reports $800mn drop in exports due to crisis over low-quality Russian oil

By bne IntelliNews July 26, 2019

The exports of Belarusian state-owned oil and petroleum conglomerate Belneftekhim shrank by $800mn in 2019 compared with the previous year due to the recent crisis over poor-quality oil supplies from Russia, the nation's Economy Minister Dmitry Krutoi said in a televised interview this week.

In April, Belarus, Ukraine, some Central European countries and Germany suspended oil imports via the Druzhba pipeline after finding contaminants that can damage refinery equipment. Russia's law enforcement agencies and oil pipeline operator Transneft launched a criminal investigation into possible deliberate contamination of oil.

"We had to process part of our own oil at our refineries. The supplies were limited. If we look at the export statistics of Belneftekhim, we will see that we have minus $800mn compared with a year before," the minister said. "Of course, it was very hard to make up for this loss using other sectors."

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

"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 the Mozyr oil refinery by around 40%, and Naftan's 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.

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