June 24 – June 30, 2019
Belarus-Russia relations

Belarus gives full play to all instruments in negotiations with Russia on the terms of oil supply and transit

The situation has not changed
Belarus gives full play to all instruments in negotiations with Russia on the terms of oil supply and transit

Last week, Belarus brought important instruments in talks with Russia to ensure optimal terms of supply and transit of Russian oil. Transneft, in turn, encourages the Russian government not to delve into the cause of the incident at the Druzhba pipeline and de facto denies her obligations vis-à-vis counterparts.

Transneft, by deciding to repay 51% interest based on the 2018 results (most of which will land in the Finance Ministry), has de facto attempted to buy the ministry’s loyalty in terms of the investigation of the incident and Transnet’s liability vis-à-vis Russian (and Kazakh) oil companies and their customers in the CIS and the EU. Meanwhile, oil companies leak discrediting information to the media, providing evidence that Transneft itself was to blame for the incident and illegal activity it undertakes stealing oil. In addition, Transneft has partially neutralized its main opponent as regards compensations for the damage caused by the incident at the Druzhba pipeline, Rosneft, by agreeing on its term of oil supplies to the Komsomolsk refinery. However, Rosneft continues to insist on concrete terms of compensations.

In addition, Transneft makes efforts to prevent possible alliances between national transit operators in Eastern Europe, suppliers, and recipients of oil, in order to resolve the compensation issue in secrecy or separately.

That said, Belarus is striving to engage all possible levers to obtain optimal conditions for the supply and transit of oil in 2020. Minsk offers Russians plenty of choices: cash compensations; filing claims to seek compensation for the Mazyr refinery losses, lost profits; increasing pumping tariffs due to non-compliance with the terms of transit; and creating oil metering points at the Belarusian part of the Friendship Pipeline. Belarus appears to have chosen a flexible approach: she is not willing to let her interests to slip away and equally, she does not limit herself in means to follow them.

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Once a week, in coordination with a group of prominent Belarusian analysts, we provide analytical commentaries on the most topical and relevant issues, including the behind-the-scenes processes occurring in Belarus. These commentaries are available in Belarusian, Russian, and English.

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