3 April 2020, Friday, 12:43
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“The Authorities Have to Tighten Belts”: Norwegian Oil Is Not an Alternative

“The Authorities Have to Tighten Belts”: Norwegian Oil Is Not an Alternative
Photo: Bloomberg

The Network calls the purchased oil "gourmet oil".

According to Reuters, Belarus will receive the first shipment of Norwegian oil on January 22.

The oil, positioned by the Belarusian authorities as an alternative, will be delivered to the country by rail from the Lithuanian port in Klaipeda.

Moreover, the purchased oil is called "gourmet oil". That is, quite expensive, even at world prices. Is it really so?

- Whether it is gourmet or not, it is hard to say. Another thing is that the composition of oil differs, Vadzim Iasub, the senior analyst of Alpari, notes in the express commentary to Salidarnasts.

According to him, many refineries, as a rule, can process oil of certain quality.

- Our refineries are set up for processing of Russian Urals oil. Norwegian oil is relatively close to Russian in its composition. So far we are talking about very modest volumes. It is enough for 2-3 days of operation of our refineries at full capacity.

Taking into account transhipment of this oil by rail, it will be more expensive than Russian oil:

- It can hardly be called an alternative: both in terms of price and volumes. In this sense, it is most likely impossible to find an alternative at all. It will be good for us to have 18-24 million tons of oil per year.

But it doesn't mean that we should sit still. We need to look for some options, even if they are higher in price. It will reduce Russia's ability to put pressure on Belarus.

What will happen if Belarus still has to survive without Russian oil, buying it at world prices?

- The concept of world oil prices is vague. One can buy oil at world prices even in America, but if this oil is delivered by tankers across the Baltic and then by rail to the Belarusian plants, the price would be quite different.

One should prepare for the price growth in any case. What will it lead to? It will lead to a rise in gasoline prices. It's not likely that the authorities will give up the scenario of raising prices by a penny. The price will grow more often. Plus, the transportation component may affect the price of all goods.

This story will lead to lower budget revenues from duties on the export of petroleum products," said Vadzim Iasub.

According to the analyst, the Belarusian authorities will have to seriously tighten their belts and think about reducing budget spendings. For example, for major sporting events, construction of large-scale facilities and benefits for state enterprises.