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Session to discuss ways to streamline operation of oil processing industry in Belarus

3 March 2020

Belarus President Aleksandr Lukashenko updated instructions concerning the search of new oil suppliers and building logistics for the delivery of raw materials at the meeting held on 3 March to discuss ways to streamline the operation of the oil processing industry in Belarus in 2020 and in the future.

According to Aleksandr Lukashenko, hydrocarbons have been one of the key factors in the global economic and political relations for the past decade.

“Certain states realized that with the help of an oil pipeline valve they can solve issues of interest in a much easier way. Don’t think that I am hinting only at Russia here. This has become a new norm for many countries with such God-given natural resources. Unfortunately, in spite of any mutual obligations, such practices are also used in relation to Belarus,” the President said. “Terms of oil supplies as an ultimatum are tied to other issues, which the supplying country wants to resolve. It happens without reference to the existing legal framework and principles of building our relations.”

The head of state said that the deliveries of raw materials to Belarus are now about 1 million tonnes smaller than planned every month. “And it happens not only because someone is playing with a pipeline valve. It happens because we did not diversify oil supplies some time ago. Monopolism also leads to things like that,” the Belarusian leader said.

According to the head of state, the domestic fuel market and the operation of chemical and other enterprises depend on hydrocarbon raw materials.

According to Aleksandr Lukashenko, unmotivated activities concerning oil supplies have a negative impact on the gross domestic products and budget revenues, although the government was instructed to step up efforts to diversify sources of economic growth several years ago. “I hope that a concrete plan to reduce the influence of oil delivery terms on the formation of the GDP will be included in the next five-year development plan,” the Belarusian leader said.

On the other hand, the President believes that the current situation is even useful to a certain extent. “We became fixated on several suppliers for no reason and do not have alternative sources of raw materials,” he said. “Oil is not an exclusive product. There are enough people who are willing to work with us even in Russia. We need to find suppliers and come an agreement with them. This is number one priority, especially amid this complicated situation in the world, including with our monopolist partner,” the head of state said.

The President said that, according to the Russian side, its oil export to China fell by one third. “Not only to China. Oil prices are falling very quickly these days. It is beneficial for us in such a situation and encourages us to try to come to terms with suppliers. Not only in Russia, but also with alternative suppliers,” Aleksandr Lukashenko said.

He emphasized that Belarus is not going to stop buying Russian oil. “We will. Because this oil, Belarusians, older generations, also took part in the organization of the process to extract and deliver this oil. And logistics is the most comfortable here. Of course, we will not stand on our knees begging for this oil every 31 December. As soon as monopolism fades away, it will be easier to agree on prices,” the head of state said.

He asked the participants of the meeting to inform him about the progress that has been already made in this field and about the future prospects.

Import logistics was also in the spotlight at the meeting. “You should work on this matter as intensively as you are working on the first matter. It cannot be solved with the help of oil transportation agreements only,” the President is convinced. “Comprehensive and systematic infrastructure decisions are needed. It is necessary to mull over the possibility to implement joint projects with foreign owners of raw materials.”

“We should finally accept the fact that we can count only on ourselves as far as the energy industry is concerned. Even the closest partner will observe their own interests in critical moments,” the President added.

Aleksandr Lukashenko remarked that Belarus has two large and well-developed oil refineries in Novopolotsk and Mozyr making high-quality and competitive products which are in demand on foreign markets. Taking into account their location, the head of state reiterated the task to diversify oil supplies and look for new promising routes. One of them goes through Ukraine via the Odessa-Brody pipeline, the second – through Baltic ports.

“There is a good market, close markets. But we need logistics. We have worked on many things concerning oil supplies in recent months. I have already said we will still buy 40%, maybe 50% of oil in Russia (if Russia wants) when we complete the diversification process. And we can get 30% of oil through Baltic ports and 30% of oil through Odessa. There will be three sources. We can fully diversify our oil import,” the head of state said.

As far the Baltic direction is concerned, the President is convinced that the issue can be solved through logistics improvement, first of all, via pipelines. “To build a pipeline is not a problem. By the way, there are couple of pipelines which we could use if we repair them and come to terms with Baltic states on these pipelines,” the Belarusian leader said.

He also recalled that there had been very serious intentions on behalf of the United States. “I have discussed this topic with the U.S. state secretary, is they could help us with the infrastructure and oil supplies. And Pompeo suggested this oil at competitive prices. There was a statement at the Munich conference: they allocated $1 billion for the construction of infrastructure facilities, i.e. for the delivery of oil,” Aleksandr Lukashenko said. “We can also count on cheap loans from them for the construction of the abovementioned pipeline with the Baltic region. We need to erect a couple of links, and the government expects that it will take up to three years to build them. No, it will take 1.5-2 years at most! And we can find #100-120 million for these links ourselves.”

“Therefore, we need to step up efforts,” the Belarusian leader emphasized.

At the beginning of the meeting Prime Minister Sergei Rumas said that Belarusian oil refineries had to decrease their work load since late December 2019. “In January-February 2020, the volume of processed oil was 1.85 million tonnes. Naftan processed 892,000 tonnes, Mozyr Oil Refinery – 962,000 tonnes,” he said.

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