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Oil Conflict: Review
January 15, 2007 17:37

Hardly had the RF and Byelorussia struck a compromise over gas price, a new conflict flared up between the two countries. This time oil or, to be more exact, the cost of supplies to Byelorussia became the sticking point.

The first oil difficulties came into the picture in December of the last year, when the head of the RF government signed the decree implying oil supplies to Byelorussia are to be imposed export duty on starting January 1, 2007. The decree applies to all the countries cooperating with the RF. The authorities clarify the following decision by the fact of Byelorussia’s one-way withdrawing from the treaty, giving preferences to the Byelorussian party, in 2001. According to the document, Russian oil, as well as any other products, was supplied to the neighbouring country duty-free and consequently cost less. In turn the consumers (oil refineries) had to give 85% of export duty on oil products made from Russian raw material at the Byelorussian territory to the RF budget and 15% - to the national one.

Byelorussia’s withdrawing from the treaty, which actually stopped incoming export duties on oil products to the Russian budget, de facto turned the republic into an “oil offshore zone” processing cheap Russian hydrocarbon materials and selling the products at lower prices, compared to Russian ones. E.g. since December 1, 2006, Russian export duty on light distillates and gas oils has made up 134 dollars per ton, at the same time Byelorussian ton of the similar product is $75.8 per ton; Russian export duty on black oil, lubricating oil and wasted oil products - $92.9 per ton, Byelorussia’s export duty – $72.2. By experts’ estimate Russia annually lost over $4bn.

 In the course of the past year the RF called upon Byelorussia to reconsider its attitude to the decree, but it had never happened. In September Russia warned the neighbouring republic that in view of the situation the RF would have to introduce common export duties for the country. So, as it has already been mentioned, the head of the RF government signed the corresponding document fixing the price increase of Russian oil supplied to Byelorussia at the rate of $180.7 per ton at least.

In response the Byelorussian State oil and chemistry Concern consisting of over 50 enterprises and organizations suspended concluded with Russian oil companies in 2007 contracts on oil supplies. Starting January 7 Byelorussia has stopped Russian oil transit to Europe and claimed for customs duties on oil transported via pipelines of the republic ($45 per ton). Moreover, within the last 9 days the country withdrew about 80 thousand tons of Russian hydrocarbon materials from the export oil pipeline. As a result Russian company Transneft had to stop oil supply via the pipeline Druzhba to Poland, Germany and Czechia.

 Russian authorities have called the introduced transit duty on oil to be unprecedented, as it can’t be taken neither as an export nor an import one. It should be mentioned that Russia transports 12% of the total oil production volume across the territory of the republic. The pipeline Druzhba carries 1.25mn barrels of hydrocarbon materials daily.

The current situation makes Russia search for new ways to transport oil to Europe in order to observe all the agreements with EU partners. E.g. the Baltic pipeline system can additionally carry about 250 thousand barrels a day. However, last Thursday witnessed a compromise: both parties found a solution to let oil be transported without delay.


Olga Pletneva

Tags: Transneft Russian oil    

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