Russia, Belarus Heading for New Energy War

Russia intends to make Belarus pay compensation for a $1 billion revenue loss caused by Minsk exporting duty-free gasoline and other oil products under the guide of solvents, Izvestia daily reported on Wednesday.

Belarus, as a member of the Moscow-led customs union, does not pay customs duties on oil supplies from Russia. In return, the ex-Soviet republic is expected to pay this duty to Russian, if it refines the imported Russian crude and exports it as fuel and petroleum products.

In an apparent move to boost its foreign currency earnings, Belarus has started exporting petroleum products described in cross-customs documents as “complex organic solvents.” Under the customs union regulations, solvents can be exported to world markets duty-free.

Russia insists Belarus must comply with the previously agreed plan and supply 2.1 million tons of gasoline and 3.5 million tons of diesel fuel refined from Russian crude to the Russian market by the end of 2012.

Belarus may incur losses worth tens of millions of U.S. dollars from such supplies because the Belarusian state-run petrochemical company Belneftekhim buys Russian crude at a price higher than oil prices in Russia and will have to sell petroleum products at rates below Russian prices, the paper said.

According to Belarus’ Statistical Agency Belstat, Belarus exported 244,000 tons of “solvents” in 2010 while these exports grew to 2.1 million tons in 2011 and to 2.9 million tons in the first half of 2012. Latvia was the main buyer of Belarusian “solvents,” purchasing 1.5 million tons.


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