Russian-Belarusian oil transit negotiations end with no results

Russian and Belarusian representatives were unable to reach an agreement regarding oil transit tariffs for 2020 during their negotiations in Minsk on Monday.

Citing a source familiar with the proceedings, BelTA reports that Belarus demanded a tariff increase, citing the oil contamination incident last year, which caused downtime on the Druzhba pipeline and damage to the equipment of Belarusian oil refineries.

The parties are currently discussing a 16.6% tariff hike, a source told Interfax. This is already a compromise. During previous rounds of negotiations, Belarus proposed indexation at 21.7%. The new tariff increase has been calculated according to a method agreed on in August last year, a source told BelTA:

“We agreed to look at the actual transport volumes for 2019 and the total revenue lost by Gomeltransneft Druzhba last year in connection with the reduced transportation volumes, and take this into account for 2020. That’s why we proposed to increase the tariff by an inflation component, as envisaged by the method, and also by the revenue shortfall, in order to compensate for it this year.”

However, Russia has not agreed to this proposal, Anatoly Golomolzin, head of Russia’s Federal Antimonopoly Service, told Interfax. “The final decisions will be made in January,” he added.

On Friday, Belarusian President Alexander Lukashenko signed a decree to impose a 50% tax on the profit from transporting oil and oil products. The Druzhba oil pipeline, built in the 1960s, passes through Belarus, and is used for one fifth of all Russia’s oil exports (roughly 1 million barrels per day). In December, Lukashenko threatened to use the pipe in reverse in order to buy oil from Europe.

At the end of last year, Moscow and Minsk were unable to reach an agreement on the terms for supplying Russian oil to Belarusian refineries. Oil exports from Russia to Belarusian refineries were suspended between January 1-4. Belarus consequently announced that it would be suspending its exportation of oil products, which amount to roughly 12 million tons per year. As of January 4, oil exports to Belarus were resumed by billionaire Mikhail Gutseriev’s companies Russneft and Neftisa. However, the 750,000 tons that they plan to supply this month are only half of the 1.5 million tons of Russian oil which the Belarusian Novopolotsk and Mozyr refineries require on a monthly basis.

  Russia, Belarus