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Polish Briefing 4 July, 2019 10:00 am   
Editorial staff

Polish Briefing: “Belarus wants to use dirty oil in a game with Russia”


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What goes on in Poland on the 4th of July.


Dyner: Belarus wants to use dirty oil in a game with Russia

Belarus proposes to Russia to increase the transit tariff as compensation for the transport of contaminated oil via the Druzhba pipeline. In order to compensate for the losses suffered by Belarus, Minsk postulates raising the tariffs by 21.7 percent. In an interview with BiznesAlert.pl, the expert of the Polish Institute of International Affairs Anna Dyner explains how the crisis related with oil pollution will affect relations between Moscow and Minsk.

Dyner said that undoubtedly Belarus will want to use the crisis which has lasted for several weeks. – The Belarusian authorities will raise the issue of increasing transit fees, because two things speak in favor of them – firstly, pollution was detected only in the Belarusian system and Belarus loses because of no transit fees, and secondly it is necessary to clean pipelines and installations. And there is nothing to hide that transit fees are important for the Belarusian budget, although not as important as for Ukrainians. However, several dozen- hundred million dollars make a difference for the Belarusian budget – she said.

At the same time, Dyner pointed out that the Russians are not eager to pay higher rates for oil transit: – The paradox is that throughout history connected with oil pollution, it turned out that it is not the transit states that are guilty, only the country sending the raw material. Belarussians have negotiating arguments, perhaps it will end in such a way that the increase will not be large, so that none of the parties will leave the bargaining table disappointed – said the expert.

However, Belarus has not yet provided information on how much damage polluted oil has caused: – It will probably be revealed in a few months when works related to the cleaning of pipelines will be completed and the losses of the damaged installation in the refinery in Mazyr are estimated and the amount they earned less on the sale of petroleum products. Losses related to the need to close the Druzhba oil pipeline and the renovation of individual pipeline sections will probably be much larger than originally estimated – said Anna Dyner.

Dyner asked whether, as a result of this situation, Belarus would be able to gain a little more independence from Russia, she said that Belarus would still be dependent on Russia, but it is an open question whether the Belarusian authorities will be able to learn from this lesson and, for example, think about whether it is not worth importing crude oil from alternative sources: – It is technically possible because unlike the Yamal gas pipeline, the Druzhba pipeline is still owned by the Belarusian state; In the past there were small deliveries from the Ukrainian port of Odessa, we can imagine a reverse on the border with Poland, which would require investment on the Polish side and would depend on the needs on the Belarusian side. However, this is not only a question of economic and financial calculations, but above all a political decision – such a decision would certainly be received very badly by Russia and could have some bad consequences for Belarus. However, one cannot exclude that in the future in Minsk there will be ideas for diversification, because the situation with contaminated oil has shown that Belarus may be very much exposed to the lack of one of the most important energy resources, which determines the energy security of the state – she said.

Russian oil is still cheaper than that which Belarus could buy on the open market, but this will change in the coming years, because in Russia was introduced a mineral tax, which replaces export duties, of which Belarus was exempt. In a few years, it may turn out that Belarus will buy crude oil at world prices from Russia. Some speculate that the Russians will want to keep Belarus as their main client, they will apply preferential rates for Minsk anyway. The whole story may also end badly for the Belarusian budget, because income from oil processing is one of the most important sources of foreign currency. At a time when the price would be identical to the global one, the income of Belarusian refineries will be much lower than at present. This is a big challenge for the Belarusian authorities and, among other reasons, there are quite sharp discussions with the Russians – concluded the expert.