Belarus and Russia cannot agree on oil price formula

Belarusian oil refineries haven’t agreed with Russian oil producers on the oil price formula of for 2011 so far.

Interfax-Zapad news agency learnt this from Belneftekhim company.

“Tax-free oil is not delivered to Belarusian refineries. Negotiations on pricing are in progress now. Belarus is represented by our refineries, Belneftekhim and Belarusian Oil Company, Russia is represented by oil producing companies and owners of the resources,” a company representative said.

In the meantime, sources from the Belarusian oil market told the Russian oil companies suggested that additional $45 per tone should be included in the price formula.

As the Russian party thinks, this may allow Russian suppliers to have equal income from delivering oil in different directions.

However, the Belarusian party cannot agree with these conditions. Minsk insists on literal fulfillment of the norms of oil agreements signed within Common Economic Space frames and ratified by the Belarusian parliament.

“We had rather strained talks that haven’t brought success so far. Russian is on Christmas holidays now, so there’s a break in negotiations,” oil market players said.

Belneftekhim noted in this regard that the company cannot comment on a position of the Russian party in these talks.

The company, however, stressed, that Russian oil would be delivered to Belarus on a duty-free basis in 2011. As of now, a Belneftekhim representative states, “the situation with the suspension of oil deliveries from Russia doesn’t arise concern”. “Plants have rather large oil carryover that will be enough for 20-day work at full capacity,” a representative noted.

He stressed: “The negotiations can be postponed due to the oil reserves and Christmas holidays.”

On December 9, Belarus and Russia singed an inter-governmental agreement on the order of payment and transfer of export duties (other duties, taxes and charges with equivalent effect) when exporting crude oil and certain petroleum products from the territory of Belarus beyond the Customs Union.

The agreement allows Belarus to get oil and petroleum products from Russia without duties. Oil from Venezuela and other countries will be delivered on conditions of a special customs regime providing for obligatory re-exporting of goods, which were produced of this crude.

The agreement took effect after Minsk had ratified a package of 17 agreements on creation of the Common Economic Space of Belarus, Russia and Kazakhstan as well we a bilateral agreement on calculating and distributing customs duties on oil and petroleum products on December 21-22, 2010.

In accordance with a draft fuel balance of Belarus-Russia union state, Russia is set to deliver 21.7m tones of oil to Belarus in 2011. The balance will be indicative not specifying the guaranteed volumes of imports.