Transshipment of Belarusian oil products via Russian ports depends on compensation to Belarus for losses from Russia’s oil tax manoeuvre - expert

<p> MINSK, May 21 - PrimePress. The prospects of transshipment of Belarusian oil products through Russian ports largely depend on how Belarus will be compensated for losses fr om the tax manoeuvre in the Russian oil sector, reckons Igor Yushkov, an expert of the Financial University under the Government of the Russian Federation, a lead analyst at the National Energy Security Fund. </p> <p>   </p> <p> Yushkov made a statement to this effect at a roundtable conference on May 20. </p> <p>   </p> <p> As previously reported, the tax manoeuvre in the Russian oil industry provides for gradually slashing to zero the export duty on oil and increasing the tax on oil extraction. Because of this, the cost of Russian oil supplied to Belarus is gradually approaching the global level. Belarusian refiners face additional costs due to the expected increase in oil prices and reduction of export duties on petroleum products. Belarusian officials estimated losses over six years from 2019 at up to $11 billion. </p> <p>   </p> <p> Yushkov reminded that the tax manoeuvre is still a debatable issue in relations between Russia and Belarus. “If the parties do not reach an agreement, then in 2024 we will come to the fact that the Belarusian oil refineries will buy oil at the world price. But if the price goes up, then there will be a question about the volume of processing at the Belarusian refineries and, consequently, the volume of transportation through Russian ports,” said the expert. </p> <p>   </p> <p> Thus, he added, without solving the important issue of the tax manoeuvre “we can’t predict the volume of exports and, consequently, the volume of transshipment of Belarusian oil products through the Russian ports”. </p> <p>   </p> <p> “That is, not everything depends on the transport component (logistics – editor’s note). This issue is probably tied to the higher negotiating positions on the tax manoeuvre. Without it, it is difficult to predict the volume of transshipment for longer than five years. The economy of Belarusian oil refineries may change and so may the markets”, said Yushkov. </p> <p>   </p> <p> According to him, “another painful topic: what will happen to the workload of the Naftan refinery (Novopolotsk, Vitebsk Oblast) due to U.S. sanctions? “Based on what we do not yet see in the public space, I make a forecast - Russian oil supplies (to Naftan – editor’s note) will continue. But there may be another scheme for these supplies. Nevertheless, we can also mark it as a risk factor (for the transshipment of Belarusian oil products through the ports of Russia – editor’s note),” said Yushkov. </p> <p>   </p> <p> He assumed that in late 2021 the volume of transshipment of Belarusian oil products through Russian ports may reach 3-3.5 million tons. “Probably, we should reach 3-3.5 million tons. After that, a lot will depend on the volume of demand in European markets, and it is also one of the risk factors. In 2020, the workload of Belarusian refineries was lower, but not because of the problems with oil, but because the Europeans were sitting in quarantine and did not consume fuel. In addition, the Europeans have already approved a program under which by 2050 they will give up hydrocarbons altogether. Therefore, in the long term demand for hydrocarbon fuel will shrink. We will have to look for new markets - these are, in particular, Asian countries, which have not yet announced such bold plans,” said Yushkov. </p> <p>   </p> <p> Russia and Belarus on 19 February 2021 signed an intergovernmental agreement on transshipping Belarusian oil products export through Russian seaports. Under the agreement, contracts under the take-or-pay condition, wh ere a sea terminal will get the entire contracted payment even if cargo sender does not transship the contracted cargo in full will be signed. </p> <p>   </p> <p> The document provides for transshipment of over 9.8 million tons of cargoes by Belarusian companies via Russian seaports in 2021-2023. The indicative transshipment volumes under the agreement are 3.5 million tonnes in 2021, 3.2 million tonnes in 2022 and 3.1 million tonnes in 2023. </p> <p>   </p> <p> These are cargoes such as fuel oil, petrol and engine oil. Over the three years 2.9 million tonnes of fuel oil from the Mozyr refinery and 0.96 million tonnes of petroleum products oil from Naftan are expected to be delivered through the port of St Petersburg. Ust-Luga is to handle 4.3 million tonnes of gasoline and 0.4 million tonnes of gasoil from the Mozyr refinery and 1.3 million tonnes from Naftan. </p> <p>   </p> <p> As previously reported, the U.S. Department of the Treasury will resume on 3 June 2021 the effect of economic sanctions on nine Belarusian companies - Belneftekhim Concern and its U.S. representative office, as well as Belneftekhim-controlled Belshina, Grodno Azot, Grodno Khimvolokno, Lakokraska, Naftan, Polotsk-Steklovolokno, and Belarusian Oil Trading House. </p> <p>   </p> <p> Launched in 1963, Naftan is Belarus’ largest refinery and one of the largest in Europe. In 2008, Naftan incorporated another Belarusian refinery Polimir. 99.83% of the company belongs to the state. Naftan is capable of producing about 400,000 tonnes of diesel fuel per year. Naftan produces euro-4 and euro-5 diesel fuel, petrol and lubricants, which are exported to the EU, the Middle East and the United States. End </p>

2021-05-22

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