Russia, Belarus Leaders Meet Amid Oil Supply Tensions

MOSCOW/MINSK (Reuters) — The presidents of Russia and Belarus, Vladimir Putin and Alexander Lukashenko, will meet on Friday, the Kremlin said, as the oil row between the two rolls into a second month, forcing Minsk to look for crude from as far afield as the United States. 

Belarus, an ex-Soviet state sandwiched between Russia and NATO states, is a major export route for Moscow’s oil and gas to Europe. Putin wants to keep Minsk in his orbit, and Lukashenko was for years getting cheap resources and loans in exchange.

For Russia, supporting Minsk costs a couple of billion dollars per year, so it has started to gradually change the practice, in particular, the way it taxes its oil industry. The changes, in turn, are hurting the Belarus budget.

With Belarus presidential elections approaching this year, Lukashenko refused to sign a new oil deal with Russia. From Jan. 1, Moscow has almost completely halted oil supplies to Belarus. Oil exports to Europe have so far been stable.

Russia partially resumed its flows to Belarus on Jan. 4 thanks to supplies from Mikhail Gutseriyev’s Safmar Group. There have been no requests from other Russian oil firms to supply oil to Belarus via pipelines this month.

Industry sources told Reuters that Russneft and Neftisa of the Safmar Group would be the sole Russian supplier of oil to the country this month.

The sources also said that around 400,000 tonnes of Russian Urals oil were shipped to Belarus via pipelines in January.

Safmar has quota for further pipeline supplies in the first quarter of 250,000 tonnes, which could be topped up by another 100,000 tonnes, traders said. Those volumes could be supplied this month, sources said.

Russneft and Neftisa were also supplying oil to Belarus by rail, sending 100,000 tonnes in January. The plan for February was the same, the sources said. Safmar declined to comment.

This is still not enough to feed two main Belarus refineries, which normally process a total of around 1.5 million tonnes of oil monthly. In 2019, Russia supplied 18 million tonnes of oil to Belarus.

Amid the tensions between Moscow and Minsk, U.S. Secretary of State Mike Pompeo visited Belarus last week, offering to “deliver 100% of the oil ... at competitive prices”. Belarus is considering buying oil from some Gulf countries too.

Belarus is also seeking oil supplies from Kazakhstan and has arranged the import of 86,000 tonnes of crude from Norway’s Johan Sverdrup field via Lithuania’s Klaipeda.

Belarusian state oil firm Belneftekhim has been preparing to send a delegation to Kazakhstan for oil talks. However, Kazakhstan is tackling the spread of its contaminated oil by cutting exports to China and also limiting supplies to refineries at home.

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