On April 23rd, Belarus announced that it had stopped all oil and oil product deliveries to Ukraine, Poland and the Baltic states.
The decision was announced by the Deputy General Director for Commercial Issues of the Belarusian Oil Company Sergey Grib at the seminar-conference “Export to the EU of the Belneftekhim Concern”, organized by the National Center for Marketing of the Ministry of Foreign Affairs.
“The supply of light petroleum products, gasoline and diesel fuel to Ukraine, the Baltic States and Poland has been suspended. At the moment (contractual obligations. – BELTA) are suspended until the issue with Russian oil is resolved,” Sergey Grib said.
The decision was presented as a needed measure to guarantee that the domestic requirements for oil products are fulfilled.
Grib added the Belarusian side is working to ensure that the contracts are not followed by sanctions due to the suspension of exports of light oil products. The damage caused by the suspension of exports is still being assessed, the deputy general director of BNK noted.
According to the Deputy General Director, for Belarus, the markets of Ukraine, the Baltic countries and Poland remain the most premium in terms of supply.
“Products that are not consumed in the markets of our neighboring countries, the so-called dark oil products, we sell through the ports of the Baltic Sea in the direction of countries further away,” Grib said.
The announcement followed April 22 reports that that low quality oil was arriving from Russia through the Druzhba pipeline. It was reported that due to poor-quality oil from Russia, equipment had broken down at the Mozyr Oil Refinery. According to media, Russian Transneft established that the alleged source of oil pollution is located on the Samara-Unecha pipeline site.
It’s interesting to note that the “low quality oil” issue appeared just a few days after the Russian decision to ban oil supplies to Ukraine.
On April 18th, the Russian government announced that Prime Minister Dmitry Medvedev had signed a decree banning export to Ukraine of oil, oil products and coal. Starting June 1st, the export of products listed in the decree will require a special one-time permit.
“The Ukrainian Cabinet of Ministers took another unfriendly step towards our country, expanding the list of Russian goods prohibited for import into Ukraine. Under these conditions, we have to defend our interests and take retaliatory measures,” Medvedev said, according to Interfax.
Experts assess that the Russian ban would result in a 15-20% price increase of oil products in Ukraine.
A large part of the Belarus oil sales is located in the Ukrainian market. In fact, Belarus receives its oil product supply almost entirely from Russia, and it resells them to other states. Additionally, it was expected that Moscow would employ strict measures to crack down on schemes that the Kiev government may employ to avoid the oil ban or to soften the pressure at least.
It’s not up to very far-fetched speculation that the decision to stop exports to Ukraine is a result of possible sanctions or repercussions from Russia due to the sales.
It could be possible that Belarus, to save face, claims that the oil delivered by Russia is of poor quality and it damaged equipment, as well as it would possibly be too expensive to refine and export. In this scenario, Minsk just required justification to stop oil exports to Ukraine in order to avoid possible Russian sanctions, but also didn’t want the decision to appear as obvious antagonism to the Washington-backed establishment.
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