Belarusian Oil Market to Become a Battlefield for Russian Companies Soon it will become clear, who is going to get the best piece of the pie

By Vladimir Shlychkov, November 18, 2013

once – Mozyr Oil Refinery and Naftan in Novopolotsk. Finally, its board of directors features some influential business heavyweights such as VTB Bank chief Andrei Kostin (the Russian bank has a local subsidiary in Belarus) and Rostekhnologii head Sergei Chemezov.

LUKOIL, the runner-up in terms of supply volumes, entered the Belarusian market earlier than other players, back in 1992. The company supplies crude to Mozyr Oil Refinery. Petroluem products are partly exported and partly sold in the internal market. LUKOIL owns a network of 81 gas stations, as well as LLK-Naftan, a joint venture producing oil additives.

Gazprom Neft supplies crude oil to Mozyr. Oil products are exported to European countries and sold via a network of over 40 proprietary gas stations throughout Belarus.

Surgutneftegaz and Tatneft, which is actively developing its retail business (the company owns eight gas stations and plans to increase that number up to 40), supply oil to Naftan.

Russneft cooperates with Naftan via Slavneftekhim, its subsidiary. The latter supplies the resources of Bashneft to Belarus, as well. A small part of Novopolotsk refinery throughput is provided by Rusvietpetro.

Does Minsk Have a Lobby in Russia?

“There are many pro-Belarusian lobby groups in Russia itself, and Igor Sechin belongs to one of them,” believes Alexander Sinkevich, a Belarusian economist. Their emergence is a sign of new reality in the neighbors' relations. Sberbank chief German Gref and Gazprom head Alexei Miller have been named recently among the most influential “lobbyists.” Obviously enough, it's got nothing to do with their commitment to Belarusian independence. It’s much simpler. 

Firstly, their companies have steady, profitable businesses in Belarus with good prospects for growth. Secondly, Sechin is willing to become an informal manager of economic relations between the countries in general: for instance, he could play a role in the Russian strategic investors' effort to acquire major Belarusian enterprises such as MAZ, BelAZ, Grodno Azot and others. The opportunities of potential “support groups” have been demonstrated quite convincingly.

Transition to Standby Mode

The reduction of Russian oil supply to Belarus in September was insignificant. According to Transneft spokesman Igor Dyomin, as a result of Rosneft's active position Transneft adjusted the repair schedule and made use of a new supply route via the Surgut – Polotsk pipeline. This allowed to pump additional volumes of Rosneft crude, and after a short period, of LUKOIL, Gazprom Neft and other partners, too. As a result, the cut of oil supply to Belarus amounted to 233,000 tons against the previously anticipated 400,000 tons. The total volume of supply amounted to 1.465 million tons.

The pipeline supply plan for the fourth quarter remains unchanged and provides for the supply of 3.1 million tons. However, Belarusian first Deputy Prime Minister Vladimir Semashko announced at a press conference that this was a provisional figure. According to Semashko, negotiations on the conditions of oil supply to Belarus are still in progress. “The balance has not been signed yet (the meeting of the Union State Council of Ministers was postponed until