Belarus urges Russia not to cut petroleum product exports

Belarus urges Russia not to cut petroleum product exports
Belarus urged Russia not to cancel exports of petroleum products to Belarus
By bne IntelliNews September 11, 2018

Belarus urged Russia not to cancel exports of petroleum products to Belarus, which Moscow argues are not economically viable, Belarusian Deputy Prime Minister Igor Lyashenko said on September 10.

"Russia proposes to clarify the balance of oil products deliveries while no one questions the balance of oil supplies. This is a negotiation process. We insist on keeping the volume at the current level," BelTA  news agency quoted Lyashenko as saying.

The official added that Belarus is against any "abrupt moves". "We need stability," Lyashenko said.

The Russian government is about to implement a crushing changing for Belarus' battered state budget by cancelling exports of petroleum products. According to Russian Energy Minister Aleksander Novak, "the indicative balance [of petroleum products exports] envisages zero figures for the supply of petroleum products from Russia to Belarus".

He added that Belarus is able to fully supply itself with its own petroleum products refined from crude oil from Russia.

According to Minsk's official data, Belarus’ imports of petroleum products from Russia grew by 49.4% year-on-year in January-June. According to Minsk-based news agency BelaPAN, energy resources reportedly accounted for half of all imports from Russia in the first half of 2018, which totalled $11bn. Specifically, Belarus imported 9.09mn tonnes of oil worth $3.4bn and 2.1mn tonnes of petroleum products worth $800mn.

According to recent Reuters report, Russia is going to cut exports of refined oil products to Belarus in a bid to curtail re-exports from the country, which come at the expense of the Russian budget.

Russia is supplying Belarus’ two refineries with around 18mn tonnes of crude oil a year to help its neighbour meet domestic needs. Supplies are not subject to export duties as Moscow and Minsk have a joint customs zone, meaning that Russia is effectively supporting its neighbour with cheap energy.

In the past few years, Belarus has also increased imports of refined products from Russia, which are also free of duties, while increasing re-exports of refined products to European countries such as Poland and Germany.

Russia is now seeking to effectively curtail re-exports of its refined products via Belarus by imposing limits on the volumes that can flow from Russia to Belarus after September 1. "Russia is imposing a ban on unlimited shipments of refined products to Belarus, arguing that it is facing lower budget revenues as volumes keep growing," Belarusian state energy company Belneftekhim wrote in a note commenting on upcoming changes.

It said Russia had asked Belarus to compensate for its budget losses for past supplies of refined products but gave no figure.