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Moscow punishes Lukashenka with oil

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Moscow punishes Lukashenka with oil

Russia decided to reduce supplies of “black gold” to Belarus over petroleum products smuggling.

This opinion was expressed by Sergei Agibalov, the sector director in the economic department of the Institute for Energy and Finance, Voice of Russia reports.

Russia will reduce oil supplies to Belarus by 26% in the fourth quarter of 2012. There's no  information why this decision was made.

Moscow currently sells Minsk gas and oil at a discount rate.  

Sergei Agibalov, the sector director in the economic department of the Institute for Energy and Finance, says what caused Moscow's decision to cut oil supplies to Belarus.

Why was this decision taken?

On one hand, there may be formal reasons, such as harmonization of the energy balance, under which the volume of processed oil should have been about 21.5 million tons. If this course of things had continued, the volume might reach about 22 million tons by the end of the year.

The processing volume might be reduced due to the scheduled repair works. The overhaul works started on Mozyr oil refinery on September 15 and will last for a month.

If suppose literally how it may affect the processing volumes, the reasons mentioned cannot fully explain this significant reduction. The reasons are more likely to be political, in particular, the ongoing inquiry into oil products re-exporting from Belarus.

What scenarios does Belarus have to solve this problem favourably for the country and fill the gas gap?

There are probably a lot of scenarios. First of all this business [oil products re-export] should be closed. The presidents of the two countries probably discussed this issue at their recent meeting. To all appearances, the Belarusian counterpart failed to propose appropriate variants. As a result, a decision to reduce supplies was announced ten days later.

Do you consider the decision is just temporary and everything will resume its normal course in future?

It's surely so. These are some routine complications. The way out can be found rather fast. It's all in Belarus's hands. These were just administrative measures. In particular, it was supposed that the solvent scheme implied among other things shipping oil to Russian suppliers to Belarus.

We see now that legal Belarusian refineries, who were not involved in the solvent scheme, will suffer from the position of the Belarusian government, which in fact refuses to recognize Russia's requirements.

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