Belarusian petrol stirred up Russian refiners
On April 8th, it was reported that a number of Russian oil companies addressed the Russian Energy Ministry asking to limit the Belarusian petrol supply to the Russian market.
Belarus has committed to supply 3.3 million tons of petroleum products to the Russian market during 2013. Fulfilling its commitments, Belarus has considerably increased petrol supplies to the Russian market. As a result, traditional spring petrol price increases in Russia were limited and Russian oil companies tried to reduce competition to continue controlling petrol prices.
Belarus and Russia sign their oil supplies balance sheets quarterly. In Q1 the oil supply was agreed at 5.75 million tons and anticipated annual volume at 23 million tons. Belarus has also committed to Russia to increase Belarusian oil products supply to the Russian market to 3.3 million tons. The Q2 2013 agreement for the oil supply has been singed and Russia has no claims for short supply of Belarusian fuel to the Russian market. Preliminary data shows that in January-February 2013 Belarus supplied 200 000 tons of petroleum to the Russian market.
Belarus profits from the reorientation of a certain volume of petrol supplies to the Russian market. Belarus does not need to pay the petrol export duty to the Russian budget, sales of high-quality petrol have increased, as well as Belarus’ production, and low prices have resulted in tenfold January - February 2013 supplies, compared with the same period last year. Belarusian fuel is actively traded in St. Petersburg and Moscow stock exchanges. In addition, petroleum products return to Belarus after procession by Russian oil suppliers, who have not committed to counter deliveries of petroleum products.
Belarusian petrol is supplied at market prices. However, the supply growth has made angry a number of Russian companies, which have created an oligopoly trading system to increase own oil proceeds. Increased supplies of Belarusian petroleum to the Russian market, despite their relatively small volumes, have prevented major vertically-integrated oil companies from increasing the margin for oil products trade. Therefore, they have appealed to the Russian Energy Ministry, with the ultimate aim to return their usual high returns to the detriment of petroleum products end-users.
Russia’ government counter claim to Belarus for the petroleum products supply was a certain guarantee against petroleum products shortages in a number of Russian regions. However Russian oil companies have resolved their problems with fuel reserves and Belarusian oil products have become a barrier for major oil companies in maximizing their profits.
Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.
The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.
Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.
For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.
Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.
The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.