19 January 2017, Thursday, 7:26

Zero Without Oil

90

The decrease of the Russian oil supplies seems a rather serious blow against Lukashenka’s regime.

In the first quarter of the year 2017, the Russians plan to ship only 4 million tons of oil to Belarus. If such tendency preserves, the Belarusian refineries will only receive 16 million tons of “black gold”. This is too little even compared with the 18 million tons of oil which we purchased from Russia in 2016. Herein, Belarus counted on receiving 24 million tons of oil, and the last year’s agreement remains in force until the new one is signed this year.

Director of the research center IPM Aliaksandr Chubryk recalls in an interview to Euroradio like the relations with Russia escalated before the presidential “election” in Belarus in 2010, and Russia allowed Belarus to buy only 14 million tons of oil. “When our relations [with Russia] get tense, oil becomes a leverage of pressure from the Russian side,” ― the expert claims.

How much is the oil, and why does Russia begrudge it?

The Belarusian refineries buy the Russian oil for US dollars. The price per ton of oil is calculated by a formula that will not be published. In 2016 it was about $ 180. In particular, in February, "Belneftekhim" claimed that Russian oil costed $ 182,63 per ton.

Russia sells oil to Belarus without imposing the export duty. The amount of the duty is calculated by the Russian Ministry of Finance on a monthly basis. Since January 1, 2017 it has amounted to $ 79,1 per ton.

The Russian officials have often said that the Russian budget incurs losses on oil supplies to Belarus. Like, if the delivery took place to some other country, the duty would have been transferred to the budget. Accordingly, the reduction of oil supplies to Belarus by Russia looks like saving.

How much will Belarus lose in the “oil war”?

According to the estimates of economist Leanid Zaika, Belarus lost $ 400 million on every million tons of oil, which Russia failed to supply.

Chief Analyst at “Alpari” Vadzim Iasub assesses the losses of the Belarusian economy slightly more modestly:

«I am not ready to claim that we are speaking about a billion. However, I would agree that it was hundreds million, ― the expert thinks cutting oil supplies caused a serious blow against the Belarusian economy. ― This is a painful blow against the export of our oil products, against taxation, against arrival of foreign currency revenues to the country.»

What is 16 million tons for Belarus, and what is the minimum threshold of supplies?

Belarus has two oil refineries - in Navapolatsk and Mazyr. For a full load, they need 30 million tons of "black gold". The more oil they process, the more profit is obtained and thus more taxes are paid to the budget.

For a minimal load, the Belarusian oil refineries need 7 million tons of oil, according to Leanid Zaika. Thus, while we are far from the threshold, beyond which begins the critical issue. However, the economist believes that due to the decrease in the volume of the Russian oil supplies the authorities can alter the formula of gasoline prices to compensate for the loss. "If there is less oil, the director of “Naftan” and six top managers will not receive their bonuses, ― and as for the budget, the economist notes that the plants transfer taxes to consumers through the formula of gasoline prices, - “The taxes account for about 50 % of the final price for petrol."

Aliaksandr Chubryk draws attention to the fact that the reduction in the Russian oil supplies affects the Belarusian export: "16 million tons is, in fact, our annual export of oil products in the best years. We consume about 7 million tons, and about 16 million tons we sell for export. This will be the situation if we get 23 million tons from Russia. If we get 16 million tons, Belarus will face a deeper fall of the GDP.”

What will happen if Russia continues cutting oil supplies?

“Oil products gave Belarus up to 40% of foreign currency revenues, ― Leanid Zaika adds. ― The oil market is a curse for Belarus, as Belarus stopped working: making good cars and excellent tractors… I would like the oil supplies to Belarus to be cut down to 10 million tons. We will be good with 7 million tons. All the rest should be earned by brains. Besides, 2017 is the year of science.”