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.
President Lukashenka has met with the head of Chechnya Ramzan Kadyrov, who visited Minsk and the Minsk Automobile Plant. Minsk has always sought to have independent links with Russian regional elites, partially, to compensate for the Kremlin's diminishing interest in Belarus. In recent years, Belarus’ contacts with the Russian regions have been extremely intense. However, with some leaders of Russian regions, primarily heads of large republics, communication was more difficult to build. As many analysts in Minsk suggested, Minsk could regard contacts between President Lukashenka and the head of Chechnya as an additional communication channel for relieving tension in relations with the Kremlin. However, most likely, a trusting relationship with Kadyrov is a value for Minsk as such, provided Kadyrov’s broad business and political interests, and a high degree of autonomy for the Chechen leader from the Kremlin.