Page 7 - FSUOGM Week 36 2022

FSUOGM COMMENTARY FSUOGM

Belarus raises oil output, plans

common oil market with Russia

Belarus has enhanced energy ties with Russia since being isolated

internationally in 2020 after a discredited presidential election.

BELARUS IN late August, the Belarusian state oil concern Since 2020 the EU has been continuously
Belneftekhim’s chairman Andrei Rybakov told reinforcing its sanction’s regime towards Bela-
WHAT: Belarusian President Alexander Lukashenko rus, and since 2021 it has also been increasing
Belarus is looking to that there’s a deadline for a creating a common the sanctions pressure on some of the country’s
ramp up oil production oil market between Russia and Belarus within key industries, one of them being the oil sector.
despite sanctions, and their Union State programme. Because Belarus’ export industries are crip-
has set deadlines for According to Rybakov, the two sides are pled due to the harsh Western sanctions, and
creating a common oil looking to remove “all possible and impossible since it has no one to lean on politically or
market with Russia. aspects, all controversial issues by the end of this economically but Russia, Rybakov’s statement
year in order to have a fair copy of the treaty by sounds more probable this time and a common
WHY: the middle of next year.” oil market treaty could indeed be ready by the
Belarus has lost trade Belarus and Russia’s Union State programme middle of next year, or at least his statement is
with Ukraine and the EU, was adopted in 1999 but few significant steps this time more probable to be sincere.
and wants to build up ties were taken until last year, when Lukashenko and
with Russia in the energy Russian President Vladimir Putin “approved” all Co-operation under sanctions
sphere. of the 28 union programmes. Belarus' oil sector has not had additional sanc-
The drawn-out process has been assumed by tions imposed on it by the West since the EU’s
WHAT NEXT: analysts to be due to Lukashenko’s unwillingness 6th sanctions package. However, the Belarusian
Ties only look set to to accept certain Russian demands, such as an oil industry has seen its export routes closed or
expand further as both integration of the countries’ tax systems, imple- marginalised by Western sanctions to the extent
Belarus and Russia face menting a common payment system and using that it’s hard for it to deliver its output.
international isolation. the same currency. Instead, Lukashenko has On February 9, Estonia closed what was
been content with making slow and sometimes assumed to have been a loophole in the existing
insignificant progress on the matter in order to sanctions on Belarus’ oil sector. Since the West-
appear loyal to the Kremlin and use the process ern sanctions on Belarus’ oil sector last year,
to bargain for more favourable oil and gas prices. Estonia’s ports had become even more impor-
However, in his latest statement, Rybakov tant, and the decision shut off a large export
also added that "the task is to have an intergov- route for Belarus.
ernmental agreement by the middle of next year. Furthermore, Belarus has lost one of its larg-
Fair conditions – they have something in com- est buyers, Ukraine, due to its own involvement
mon not just in our programme but in the tax in Russia’s invasion on February 24. Before the
sphere. So all programmes should be adopted as war, Belarus was Ukraine’s largest source for
a whole.” oil product imports and Belarusian products
While Belarusian officials have made similar accounted for 41.9% of Ukrainian oil imports.
statements before, making analysts believe that To counteract Western sanctions, Belarus
they were in fact going to ratify and implement and Russia have initiated joint large-scale import
all of the union programmes, the political situa- substitution programmes aimed at boosting
tion is very different this time. both countries’ industrial production.
The Belarusian regime has previously As bne IntelliNews reported on in July, Rus-
enjoyed a higher degree of independence from sia could increase its imports of Belarusian
Russia and has for a long time performed a suc- petrochemical products in the coming years, if
cessful balancing act between the EU, Russia and it turns out to be profitable. However, the Bela-
the rest of the world. rusian refineries Naftan and Mozyr had both
But since 2020, Lukashenko has severed both halved their processing already in April, most
his economic and diplomatic ties with the West likely since there was nowhere to export Bela-
and increased his dependency on Moscow to the rus’ refined oil products due to the Western
point of no return. This was especially apparent sanctions.
to everyone when he allowed Russian troops to Shortly after this announcement, Belarusian
invade Ukraine from Belarusian territory on Deputy Prime Minister Yuri Nazarov told state
February 24. Belarusian media that “In view of restrictions,

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