Belarus finds alternative to Russian oil

The Belarusian Oil Company (BNK) has purchased 80,000 tons of oil from Norway, BelTA reports, citing the press service of Belneftekhim, the Belarusian State Concern for Oil and Chemistry.

“The Belarusian Oil Company has purchased a batch of Norwegian oil. We’re talking about 80,000 tons. It is intended for refining at Naftan,” stated the press service, as cited by BelTA.

Naftan is one of the two Belarusian oil refineries situated in the Vitebsk region. It is used to refine oil from Russia, which is then re-exported to countries in the EU. Roughly 60% of the refinery’s output is exported.

According to Reuters, Belarus has bought Norwegian oil from the Johan Sverdrup field in the North Sea. Development of the field began in October 2019. S&P Global has described it as “gigantic”, noting that production at the field could reach 400,000 barrels per day by February, and could potentially even reach 660,000.

The effective volume of oil that can be refined at Naftan is around 9 million tons per year, which there are plans to increase to 12 million in future. The refinery thus processes around 25,000 tons per day on average, which means that the oil batch purchased from Norway will be enough for just over three days. At the start of January, Belneftekhim vice chairman Vladimir Sizov said that Minsk is expecting to receive 650,000 tons of oil from Russia in January, with a first batch of 100-130 million tons.

Reuters observes that Belarus has tried before to import types of oil other than Russian Urals, for example the light types Santa Barbara and Azeri Light. However, all of these purchases have been “episodic and demonstrative in nature”, Reuters writes. Oil from Johan Sverdrup is similar in its characteristics to Russian Urals and could compete with it, the agency observes. However, alternative oil sources are always more expensive than crude oil bought from Russia. The same applies to oil from Johan Sverdrup. A Reuters source at the Port of Klaipeda said that the oil which comes by railway to Navapolatsk, where there is a refinery, is significantly more expensive than the oil delivered through Russian pipelines. Transportation in cisterns adds an additional cost of $20 per ton.

The agency’s sources believe that the oil may have been sold by Total, which is one of the operators of the Johan Sverdrup field alongside the Norwegian companies.

“We are waiting for the delivery, and there we will continue negotiations,” said a spokesperson for Belneftekhim when asked about the possibility of future deliveries from Norway.

Minsk and Moscow are currently in disagreement regarding the price of oil. Belarus is demanding that Russia supply oil at the price on its internal market. At the end of December, following an unsuccessful attempt to negotiate a long-term contract with Russia, Belarusian President Alexander Lukashenko instructed refineries to look for alternative suppliers. At the time, he said that the oil could be transported by railway or through the ports of Baltic states.

In mid January, Belarusian First Deputy Prime Minister Dmitry Krutoy said that Minsk had offered to purchase oil from all potential suppliers – in Ukraine, Poland, the Baltics, Kazakhstan and Azerbaijan. The following day, Kazakh Energy Minister Nurlan Nogaev said that a delegation from

Minsk could be sent to Kazakhstan to discuss a deal. “We will organize a meeting with the resource holders, if some of the oil companies expresses the desire, at an economically favorable price, or on conditions which satisfy them,” he said.

The Polish company PERN, which operates the Druzhba pipeline, said that oil cannot be delivered to Belarus through the pipeline due to the characteristics of the technical infrastructure.

  Russia, Belarus, Norway