Czizh and Ternavsky oil business at risk

The EU sanctions hit a number of private companies engaged in oil refining and oil sales.

Among them are oil companies owned by businessmen Yuri Chizh and Anatoly Ternavsky. The companies were put on the blacklist for financing the regime of Alyaksandr Lukashenka.

Among Yuri Chizh's five companies dealing with Russian oil imports, crude oil processing at local oil refineries and oil products a exports, two were affected by sanctions – Triple and NeftekhimTrading. Two of Anatoly Ternavsky's companies, Univest-M and Unis-Oil, dealing with oil refining and petrol and diesel fuel sales, were included in the list.

The website of Triple company says some millions of tonnes of oil were delivered to Belarus for processing that allowed the company to occupy the leading position among Belarusian oil refining companies. Russian oil is supplied to Mozyr and Navapolatsk under a tolling agreement and then exported or sold on the domestic market. In 2009, the first petrol station Triple was opened in Minsk. A network of filling station work in Belarus today.

Ternavsky's oil traders are as good as Triple company. His companies achieved a dominant position in oil business in the recent years. Main sales markets are Lithuania, Latvia and Poland. Despite the financial crisis in Belarus, volumes of supplies showed significant growth last year. According to the border traffic, export to Latvia increased by more that $100mn in comparison with last January.

Do the sanctions mean both Chizh and Ternavsky will have to stop supplies? Specialists suppose the businessmen still have room for maneuvers. In particular, in Yuri Chizh's holding, Triple Energo, Belneftegaz and Neonafta are also engaged in oil business in addition to Triple and NeftekhimTrading. It will hardly be a problem to forward oil and financial flow to these firms, which are not affected by sanctions.

Secondly, with the open border with Russia, Belarusian oil products can be delivered to consumers via the Russian Federation. This trick can be used by Anatoly Tarnovsky, who used to run business in Russia for many years and was vice president of Slafneft company.

According to economic observer Alyaksandr Herasimenka, it would be rather difficult to trace Belarusian petrochemical products in the total flow:

“In my opinion, it will be rather difficult to implement these sanctions as there are too many channels of oil products distribution. Our flows are not big, so they can easily get lost in the total flow. It will be difficult to trace them. They can be forwarded via Russian traders or third counties traders. I think the sanctions are unlikely to be effective. Exporters will not suffer if they want so. It's a complicated market, a multi-channel market, so any tangible consequences for the companies can hardly be expected.”

As said by Herasimenka, the authorities will not allow to offend the oligarchs:

“They are close to top officials, they are treated kindly by the authorities. They have preferences, favourable business conditions. Strategic financial and trading flows run through them. They have their margin for this. It's simple. It's hard to say who has most of the profit. The only thing, taxes seem to be paid to the state budget. These companies are the largest tax-payers in Minsk and Belarus. The country and people seem to have something from this. But no one can say on what incomes of shareholders are spent.”