Russian Companies May Suspend Oil Supplies To Naftan Amid U.S. Sanctions

Russian companies may suspend oil supplies to Novopolotsk’s Naftan in May amid the U.S. sanctions that mandate an end to all relations with the plant by 3 June, four sources told Reuters. Meanwhile, the Mozyr Oil Refinery, which did not fall under the restrictions, planned to start repair works in May.

Photo: Reuters

The largest suppliers of raw materials to Naftan are Rosneft and Surgutneftegaz. Among other suppliers are Tatneft and the companies of Mikhail Gutseriev [Russneft and Neftisa]. According to the sources, Rosneft and Surgutneftegaz are not yet planning to sell oil to the Novopolotsk enterprise next month, as they fear secondary sanctions.

“We are waiting for the decision of the management. It is not official yet,” said a source at one of the Russian oil companies.

Another source noted that the issue of supplies in May will be resolved in the coming days, but expressed doubts that shipments to Naftan will continue next month, since the transactions use price formulas based on international quotations and are settled retrospectively.

The U.S. has imposed sanctions against Belarusian state-owned companies and officials since 2006 for violations of human rights in the country. Since 2015, the U.S. has granted sanctioned businesses a license to operate, which has been renewed annually.

Effective 19 April of this year, the U.S. replaced its current 2G license with 2H, which recommends that counterparties of any of the nine companies that are subject to sanctions complete any transactions with them by 3 June. The black list includes Naftan, Belneftekhim, Belneftekhim USA, Belarusian Oil Trading House, Belshina, Grodno Azot, Grodno Khimvolokno, Lakokraska, Polotsk Steklovolokno.

Meanwhile, in May, Naftan will continue to sell oil products on spot terms, since spot sales allow transactions to be completed by 3 June.

“Negotiations are underway with the Russian side. Of course, this news came as a surprise. Previously [when the sanctions were in force] there were no such issues. Let’s hope that the Russian partners will not use this Belarusian vulnerability for their own selfish purposes,” said a TUT.BY source in the oil sphere.

The government of Belarus and the Belneftekhim representatives could not comment on the information. Earlier, Belneftekhim stated that the U.S. decision to renew the sanctions is “groundless and unpromising”. In the event of a decline in oil production at Naftan, the workload on the Mozyr refinery will increase, which will have to provide the domestic market with fuel and fulfil export contracts. Meanwhile, the plant had plans to carry out repairs.

According to enkorr, last week the Mozyr Oil Refinery told Ukrainian contractors to prepare a schedule for offloading May resources until 15 May, after which they will be put on hold. The plant will reduce shipments of diesel fuel to Ukraine by 35%, or from 240 thousand tons to 150 thousand tons.

Ukrzaliznytsia has prepared for the upcoming changes in the logistics of transporting diesel fuel in Ukraine after stopping the supply of these products from Russian plants and the temporary closure of the Mozyr refinery for repairs, the press service of the enterprise said. Ukrzaliznytsia is ready to ensure the export from seaports of up to 200 thousand tons of diesel fuel per month.

Source: TUT.BY