Belarus And Russia Agree On Oil Supplies For 2021

Moscow and Minsk have agreed on the terms of deliveries of Russian oil to refineries in Mozyr and Novopolotsk next year. At the same time, Belarus will continue to purchase crude oil from alternative suppliers by sea.

Prime Minister Roman Golovchenko said that Belarus has signed oil contracts for 2021 with a number of major suppliers from Russia. According to Golovchenko, the Russian side is ready to supply “the maximum volume” of oil, while the Belarusian side is ready to refine “as much as it will be beneficial for us”.

“The benchmark for both sides is 18 million tons. But everything will depend on the market situation,” the Prime Minister summed up. Russia and Belarus have approved a schedule for oil supplies via pipelines for the first quarter of 2021. Belarusian oil refineries are expected to receive about 4,5 million tons of Russian oil, a source in the industry told TASS.

This autumn Russian companies and the Belneftekhim concern held several rounds of negotiations. Minsk suggested to revise the oil price downward, while Russian exporters, particularly Rosneft, insisted on increasing it, three sources told Reuters. Nevertheless, a “pricing/volume formula” remained at the level of 2020.

An important nuance is that the inter-budget transfer mechanism for Russian oil in 2021 will not work, Golovchenko said. He spoke in favour of moving away from such “not so market instruments.” In 2020, this mechanism compensated Belarus for the premium to Russian oil supplying companies, which was included in the supply price.

Recall that earlier Minsk insisted on the abolition of the premium, citing the rising cost of raw materials caused by Russia’s tax manoeuvre in the oil sector. Thus, the price of Russian oil for Belarus will increase in 2021. As the deputy chairman of Belneftekhim, Svetlana Gurina, said, next year the cost of Russian oil for Belarus will already be 88-90% of the world one. It is 85% at the moment.

What about alternative sources?

In 2020, Belarus resumed the supply of offshore oil due to the lack of imports from large Russian companies in the first quarter due to price disagreements. Belneftekhim carried out alternative imports from Norway, Saudi Arabia, Azerbaijan and the U.S. through the ports of Lithuania and Ukraine. According to TUT.BY, the purchase of tanker oil will continue next year. The focus will be made on the supply of raw materials through Ukraine to the Mozyr Oil Refinery, since “the logistics are better than through Klaipeda to Naftan.” The volume will remain the same – one tanker per month.

It is known that the Ukrainian operator of the Ukrtransnafta pipeline system and BNK UK Ltd (a subsidiary of the Belarusian Oil Company, BNK) have extended the contract for oil transit for 2021. CEO of Ukrtransnafta Mykola Gavrilenko said that the tariff and contractual conditions between the parties for the next year correspond to the current agreement. There was a request from the Belarusian side to make a certain discount on the tariff. “The volumes will increase – the tariff will decrease,” Gavrilenko explained.

He also clarified that BNK has already nominated one tanker for the first ten days of January 2021. In general, by the end of 2020, the transportation of Azerbaijani oil from Odessa to Belarus amounted to 880,000 tons. Ukrtrasnafta earned $13 million by purchasing 180,000 tons of Azerbaijani oil during the fall in prices in the spring and its subsequent sale [80,000 tons – Ed.] to Belarus in November.

Source: TUT.BY