Russia suspects Belarus of smuggling petroleum products

Category status:
April 22, 2016 18:13

Russian Deputy Finance Minister Sergei Shatalov said on June 28th that Russia’s Finance Ministry suspected Belarus of exporting petroleum products under the guise of organic solvents in order not to pay export duties to Russia. Apparently, Russia will insist on putting the smuggling to an end, which, in turn, will result in substantial reductions in foreign proceeds and reduced profitability of Belarusian oil refineries and oil traders.

We have encountered that the organic solvents export from Belarus to foreign markets has increased by several times. We fear this is a cover up. It is possible that under the guise of petroleum solvents petroleum is exported. Currently we are looking into this matter and will react accordingly. We will negotiate with our Belarusian counterparts”, Mr. Shatalov said while speaking at a European Businesses Association’s conference.

It should be emphasized that cessation of petroleum products smuggling under the guise of solvents, diluents and lubricants will result in significant reductions in foreign exchange proceeds and will reduce the profitability of Belarusian oil refineries and oil traders.

In January – April 2012, Belarusian oil products’ export increased by 62.8% to USD 5.443 billion, diluents and solvents’ export increased by more than 7.3 times to USD 1.705 billion, and lubricants materials export – by 43 (!) times up to USD 590.926 million. Crude oil exports increased in January-April 2012 by 4.5% to USD 450.549 million (supply to Germany).

All in all, Belarusian “oil” exports (oil, mineral oil, diluents, solvents, lubricants, liquefied petroleum gas) in January-April 2012 doubled compared with the same period last year - to USD 8.307 billion. The share of “oil” exports in the overall country’s exports increased from 35.4% in January-April 2011 to 51% in January-April 2012.

Moreover, it seems that Belarusian companies re-export Russian oil under the guise of solvents and thinners, without paying applicable fees to the Russian budget. In January-April 2012 exports of Belarusian oil products, thinners, solvents and lubricants in physical terms (9.144 million tons) was significantly higher than domestic oil production (7.578 million tons).

In January-April 2012 Belarus imported 4.189 million tons of duty free petroleum products worth USD 2.583 billion, which is 3.7 times higher than in January-April 2011. The bulk of supply (99.1%) is coming from Russia.

Therefore, Belarusian oil traders jointly with Russian oil companies have created de facto oil offshore in Belarus to evade export duties payments to the Russian budget. Experts assess Russian budget’s losses in 2011-2012 as exceeding USD 1.5 billion. Therefore one should anticipate the oil offshore to seize to exist in the near future. In other words, Russia will request Belarus to show the real volumes of petroleum products exports and, consequently to pay export duties in full.

For reference. The National Bank of Belarus in 2011 paid USD 3.07 billion in export duties for oil products to the Russian budget, and in January-May 2012 – USD 1.857 billion.

Similar articles

President ensures continuity of state administration with young middle-level personnel
October 02, 2017 12:08
Image: BRSM.BY

President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.

President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.

The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.

The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.

The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.