The authorities in Minsk are urgently looking for suppliers of oil on the background of cessation of imports from Russia. Belarus without it would not survive for long, but without Russian oil she won’t be assured of DW experts.
Belarus for three weeks does not receive oil from Russia. This is a new Chapter in the chain of conflicts between Moscow and Minsk over energy supplies. The formal reason – absence from January 1 to the contracts between the Belarusian side and the Russian state companies “Rosneft” and “Gazprom Neft”. On Friday, January 17, an unnamed source told “Interfax” that negotiations will continue at the level of Vice-premiers. Partners cannot agree on a price: Moscow offers conditions last year, but they are less profitable for Minsk in light of the tax maneuver in Russia.
Belarus imports annually 23-24 million tons of Russian oil in total exports to Russia of 250 million tons. Up to 6 million, according to experts, are the needs of the Belarusian economy and the rest for processing and resale to international markets.
Lithuania and Latvia could revive the “Friendship”
If you don’t reach an agreement, the Belarusian authorities will require alternative. Minsk has already sent a commercial offer to a number of companies of Ukraine, Poland, Baltic States, Kazakhstan and Azerbaijan. Observers say that technically, to establish a supply of oil to Belarus not from Russia – solvable problem. “We may be partners of Belarus in the issues of oil supplies, said in an interview with DW, former Minister of economy Dainius Kreivys. – We have the infrastructure to supply: oil terminal and the oil pipeline “Friendship”.
However, the Northern section of the pipeline “Druzhba” is not used since the mid 2000-ies, after the largest oil refinery in the Baltic States, the Lithuanian oil refinery in Mazeikiai, passed from the company “YUKOS” to the Polish PKN Orlen. Latvia also stated that it is willing to participate in reverse deliveries to Belarus. More expensive option is to ship oil by rail.
“Reverse supplies from Poland? The poles, too, have obligations”
However, the majority of respondents DW experts agree that Belarus can’t afford to buy oil in the same amount from an alternative supplier. “There’s just no money. At best it will bring in around 5-6 million tons necessary for survival,” – said in an interview with DW, Professor of the Higher school of Economics in Moscow (HSE) Andrey Suzdaltsev is one of the leading Russian specialists in Belarus.
He pointed out how expensive the logistics for delivery of oil in the country, which has no outlet to the sea, and the low efficiency of Belarusian oil refineries. “The biggest mystery of the Belarusian government – what is the real produce of light oil products from Russia supplied oil. The scatter of data is huge. The fact that the Belarusian refineries are old and inefficient, and world prices for raw materials they simply will go bankrupt,” – said the expert.
Opportunities of Belarus in establishing alternative supplies, according to Suzdaltsev, is limited to the assumed contractual obligations: “Belarus is included into the European system of energy supplies. It must fulfil its obligations, for which he receives good money. And she can’t just pick up and start pumping oil through the pipeline “Friendship” reverse, back to his from Poland. From the Polish side, too, there are contractual obligations that she’s not going to break”.
The business model of Belarus rests on cheap oil from Russia
Minsk needs Russian oil is not only for their own use, but for resale, said the experts. “Without Russian oil Belarus, of course, will not do, because it provides 42 percent of its trade with the outside world,” – said Suzdaltsev.
Today we have a situation, when Belarus “on macroeconomic indicators as a country-exporter and manufacturer of energy,” said DW Director of the Russian programs of the Finnish Institute of international Affairs Arkady Moshes. This is the result of extremely favorable for Minsk subsidies from Russia.
“The export of petroleum products is a source of currency, is a thing absolutely necessary. If you engage in pure mathematics and extrapolate (the lack of supplies. – Ed.) at least for the next few months, all looks very serious,” continued the Moshes. According to him, the full termination of export of oil and oil products from Belarus would be, by and large, the collapse is impossible to imagine, says Moshes. Moreover, in 2020, to be held the presidential elections in Belarus.
The scenario of abandonment of oil from Russia would lead to the collapse of the business model of Belarus, so the Moshes finds it so unlikely that, in his words, “it makes little sense to try to multiply the financial losses on a certain number of months, and especially years.” “If Belarus to import oil at world prices, the economy will collapse in a few months”, – says Suzdaltsev.
Lukashenko does not change the system and not going, experts say
Discussion in the country about to depart from current economic models go for many years, reminded Arkady Moshes. After all, in his words, “countries that for a long time tried to negotiate (with Russia. – Ed.) of cheap gas and cheap oil, system and very lost. And this is another illustration of the fact that this model is a dead end, and indefinitely to go on this horse is impossible.”
But for a departure from previous business models requires a profound macroeconomic reforms. In the country, according to Moshes, a sufficient number of technocrats who know how to carry out reforms. “Hitch, by and large, the President,” he said. “I don’t think Lukashenko is going to change the structure of the economy and their own thinking of the farm” – he criticized the leader of Belarus, a former Lithuanian Minister of economy Dainius Kreivys.
“Naive blackmail” of Minsk
DW interviewed observers believe that President Lukashenko will continue to seek concessions from Moscow. Minsk has threatened to raise rates for pumping oil via “Friendship” and introduced a new environmental tax on her monthly transit and means to limit the capacity of the pipeline, reportedly due to repair.
“Until now, the strategy of negotiations Lukashenko was to increase rates so that in the end Moscow agreed. Still it worked – within a quarter of a century,” said Arkady Moshes.
“The problem is that Lukashenka is no longer anything that he could sell Russia to get discounts on gas and oil. As once he was, for example, gas transportation system,” – said Dainius Kreivys. “It’s blackmail Russia, and naive blackmail,” said Andrei Suzdaltsev of the higher school of Economics.
The task of the Kremlin: to reduce subsidies, to retain the loyalty
The DW sides expect it to reach a speedy compromise. Kreivys not see any difference from previous conflicts, “in addition, the negotiations dragged on and moved into the new year.” But for Andrei Suzdaltsev current conflict between Minsk and Moscow is special.
“Marks the 20th anniversary of the Union state. It was based on the balance of interests. In this balance there was no integration, but it is made to explain to the Russian taxpayers. But after 20 years with periodic scandals, the balance began to crumble” – says Suzdaltsev.
Today, Putin is putting pressure on Lukashenko with the aim of creating a common state, but he refuses, said Kreivys: “in retrospect, they always found a compromise. Lukashenko simulates negotiations with the West only in order to have a tool of pressure on Putin and knock the price a little better.”
The Kremlin, sums up the Moshes, set the strategic objective – “to reduce the level of subsidies to Belarus, while maintaining the level of geopolitical loyalty”, and performs this task, being prepared for short-term costs.
“Russia proceeds from the fact that Lukashenko will not destroy the Belarusian state and its economy. Therefore, in Moscow believe he will go to some options of real integration, because without integration Belarus will not survive,” warns Andrew Suzdaltsev.
Associate Professor of the HSE reported that the Kremlin is gradually losing patience against the Belarusian leader, “Lukashenko periodically breaks down. And here in Moscow is a great hope for the Belarusian political class, the Belarusian elite circles. They understand the formula of the Belarusian government.” It is, according to Suzdaltsev, is very simple: “the person who solves the problems of the Republic in Moscow, and he has the right to infinite power. And Lukashenko elections in six months. And is now fighting for his political survival.”