On June 24, the operator of the Russian oil transit system Transneft announced that the hydrocarbon producers Rosneft and Surgutneftgaz had not reserved any pipeline volume for the transport of oil to the Belarusian refinery Naftan for the third quarter of 2021 (TASS, June 24). Transneft’s announcement came as no surprise. Following the US decision to revoke its moratorium on the implementation of sanctions against Belarusian state refinery enterprises within 45 days, media sources reported that Russian enterprises plan to comply with the regulations. reapplied restrictions (Neftegaz.ru, June 1; see EDM, May 18).
Transneft said it would continue to transport 2.36 million tonnes of crude from its suppliers, including Rosneft, Surgutneftegaz, Tatneft and Lukoil, to Belarus’ second major refinery, Mozyr, which US sanctions had not targeted. Unlike Naftan, a 100% state-owned company, Belarus co-owns the Mozyr refinery with Russian Slavneft, a 50-50 joint venture between Rosneft and Gazpromneft. Naftan’s management, in turn, claimed that Russian companies would continue to supply oil to the refinery (TASS, June 24).
The two Belarusian refineries have historically been extremely dependent on Russian oil imports, normally around 24 million tonnes per year. However, after the contamination of the Druzhba pipeline in the first half of 2019, and due to the failure of Russia and Belarus to reach an agreement to extend their already expired supply agreement at the end of this year, Minsk has sought to diversify its import options. . In particular, Belarus bought oil from third-party suppliers such as Azerbaijan, Saudi Arabia, and even the United States (Belta.by, July 16, 2020). Yet Russian companies have finally overtaken these new supplies again, after Moscow and Minsk finally agreed on a new deal. Yet the long-standing feud with Moscow has forced the Belarusian government to redouble its efforts to seek potential short- and medium-term solutions to reduce the country’s dependence on Russian supplies.
In 2019, Minsk signed one-year supply agreements with Azerbaijan and Kazakhstan. And in December 2020, the Belarusian National Oil Company renewed its contract with the Azerbaijan National Oil Company (SOCAR), although the terms of the contract (volume and duration) were not disclosed. Public records reveal that SOCAR supplied one million tonnes of crude to Belarus in 2020. The total amount of these shipments would have gone to the (unauthorized) Mozyr refinery, via the Odessa-Brody pipeline (Belta.by, December 31, 2020). SOCAR would also have accounted for 10% of all oil volumes imported by Belarus in the first quarter of 2021 (Haqqin.az, June 28). Belarus will most likely be able to receive the remaining contract volumes from SOCAR, as the contract predates the revocation of the moratorium. However, the state-owned Azerbaijani oil company announced that it too would avoid supplying oil to Naftan.
In November 2020, Kazakhstan finally ratified the agreement negotiated with Belarus in 2019. The bill has raised concerns among Kazakh policymakers, as the two countries are in fact competitors in the Union’s petroleum products market. Eurasian economy (Egov.kz, November 10, 2020). Nevertheless, Kazakhstan has agreed to export around 3.2 million tonnes of crude oil and heavy petroleum products to the Naftan and Mozyr refineries. Petroleum products (except fuel oil and petroleum coke) produced in these two refineries from Kazakh petroleum were apparently intended for domestic consumption only. Notably, Belarusian Prime Minister Roman Golovchenko visited Kazakhstan at the end of June, where he signed a new contract to import oil and petroleum products from the Republic of Central Asia (Belarus Segodnya, June 28). Details of the deal are unknown.
The decision by Rosneft and other Russian energy companies to comply with US sanctions against Belarus was not particularly exceptional. Last March, for example, Rosneft fully adhered to US sanctions against Venezuela: namely, the Russian oil giant withdrew from exploration and development projects it had planned to pursue in the American country. from South (Rosneft.ru, March 28, 2020).
In addition, Rosneft’s motivation to avoid falling under US sanctions makes clear business sense. Although majority owned by the Russian state, Rosneft also has international players such as BP and QH Oil Investments LLC of Qatar. Moreover, although deprived of a major buyer for their crude exports, Russian oil companies should actually benefit from US sanctions against Naftan. They will benefit from less competition from Belarus in critical markets, notably the European Union and Ukraine. These two destinations accounted for almost all Belarusian exports of petroleum products in the first two months of 2021 (Nangs.org, May 13).
The Belarusian economy is heavily dependent on the re-export of Russian oil and overseas sales of refined petroleum products. An inability to compensate for Russian supplies will therefore lead to a significant decrease in budgetary revenues as well as shortages in the domestic market for petroleum products. This situation creates a favorable environment for Russian companies to establish themselves in Belarus using the political clout of Moscow. It will also facilitate the efforts of some Russian companies to carve out more economic assets in the neighboring country.
These financial difficulties appear destined to further complicate Minsk’s efforts to diversify and move away from dependence on Russian hydrocarbon imports, as Belarus will not be able to allocate sufficient financial resources to it. the purchase of more expensive crude from third countries or the implementation of necessary pipeline projects such as Gomel-Gorki, aimed at connecting the refineries of Naftan and Mozyr (Belarus24, October 23, 2020). The predictable geo-economic and geopolitical results of Washington’s sanctions on Belarus’ energy sector are thus becoming clearer with each passing month.