Lukashenka given flick on pump
- 28.01.2010, 9:33
The Russia-Belarus oil war has ended: tariffs for Russian oil in transit increases only by 11%; Minsk cannot count on getting large profits from refining cheap oil.
Russian Deputy Prime Minister Igor Sechin told President of Russia Dmitry Medvedev after the talks with Belarusian Deputy Prime Minister Uladzimir Syamashka a “package of documents” had been signed, including amendments to an agreement on oil deliveries to Belarus, new oil pricing procedures, and the balance of oil for 2010.
Sechin also mentioned a joint statement on oil transit guarantees among the deals signed. We remind that it was the problem of transit that has worried the markets since December 2009 – Russia reduced oil flow to the Belarusian refineries as Belarus, referring to the Customs Union arrangements, was disputing over Russia’s intention to impose 100% export duties on oil delivered to Belarus in 2010 above duty-free 6.3 million tonnes for domestic needs. In 2009, duties on a part of supplies were lower three-fold, so Belarus insisted on either expanding the duty-free quotes or several-fold increasing tariffs for Russian oil transit through Belarus as the 100% export duties on Russian oil would make it unprofitable for the Belarusian refineries to export oil products. Besides, 6.3 million tonnes of oil for domestic needs were supposed to be delivered on a duty-free basis.
According to Kommersant, the negotiations started yesterday with the first (since the Customs Union agreements came into effect) sitting of the Union working body, the union commission. Deputy Prime Minister Igor Shuvalov had a meeting with Prime Minister Vladimir Putin before the sitting. He told Putin creating “additional supranational bodies, namely a customs body of the three countries and a single treasury, would be discussed at the sitting. It was also planned to agree on how to distribute customs duties collected on the three countries' territory.
The union commission announced after the sitting that it had failed to adopt a final decision on each issue. Russian Deputy Finance Minister Sergei Shatalov explained: Belarusian Deputy PM Andrei Kabyakou proposed that Belarus’s share in union customs duties should be increased by 0.3% “in addition to 5% the county already has”. The parties agreed to distribute customs duties in accordance with their foreign trade turnover in 2007–2008. According to the formula, Belarus's share will amount to 5%, Russia’s – 86.5%, Kazakhstan’s 8.5%. Kazakhstan is satisfied with the decision, so Belarus supposed Russia should share that didn’t suit the Russian negotiators.
The question was set aside for at least two weeks in order to “study proposals of Belarus”, as Igor Shuvalov said. The single treasury hasn’t been created yet. Nothing was said about changes in customs tariffs offered by Russia (in particular, duties for paper and a number of chemical products). However, Igor Shuvalov stated that the Customs Union would discuss correction of duties on a monthly basis. And the problem of imported radio electronic goods and wine to Russia is named purely Russian “administrative stumbling block” by Shuvalov, and it would be solved by Russia independently. However, despite of the problems with “oil” agreements in the union, Russian officials left the negotiations satisfied: they obviously knew that after the session of the commission the delegation of Belarus goes to Igor Sechin to sign documents on oil agreement.
After the talks with Sechin, the essence of the compromise of the two sides was not completely disclosed either by him or by his Belarusian counterpart. Uladzimir Syamashka just explained to the Belarusian official; information agency BelTA that tariff for Russian oil pumping via Belarus (in 2010 Russia plans to transport 21.5 mln tons of oil) would be increased by 11%, and by October 2010 Belarus would be able to increase the tariff “considerably” presenting calculation to Russia, or to increase tariffs in the future “at the level of inflation” plus 3%.
However considering that Belarus initially threatened to increase tariff tenfold, even “gradual” increase of tariffs to this level would take 7-8 years. Proceeding from the information of the Komersant’s sources in the government of Russia who know about the progress of negotiations, it is an overstatement as well. Under these reports, Belarus agreed to fix the tariff in Russian rubles; besides, it is obliged to consider costs of “alternative routes” in calculation of tariffs, that is the cost of pumping Russian oil by Russian Transneft to Primorsk. Duty-free quota hasn’t changed, and Russian export duty would be fully collected from oil deliveries to the country over 6.3 mln tons.
It destroys hopes of state-run Belarusian oil refineries to make money for processing cheap Russian oil at least at the same level as in 2009, and makes necessary a search for new investors for them. As Kommersant’s interlocutors in the White House explained, in the next few months intergovernmental talks of Russia and Belarus on the whole range of energy issues are to take place – “oil, gas, nuclear power station construction”. Most likely they are to take place before October 1. The sides have scheduled checking of oil deliveries balance to this date. That’s’ why it is obvious that by July 1, when Belarus and Russia are to eliminate internal customs border under the agreements of the Customs Union, the “oil issue” is to have no influence in the relations of the two sides.