Page 11 - FSUOGM Week 06 2020
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FSUOGM POLICY FSUOGM
Belarus fails to secure oil, gas concessions from Russia
BELARUS
Putin and Lukashenko met for a third time, but Belarus failed to secure concessions.
BELARUSIAN President Alexander Lukashenko failed to secure discounts to sup- plies of Russian gas and oil during his eight-hour meeting with his Russian counterpart, Vladimir Putin on February 7.
Belarus’ long-term oil and gas supply con- tracts with Russia expired at the end of last year. The pair have agreed to continue gas supplies on the same terms as last year until the end of Feb- ruary. But no such arrangement has been agreed for oil deliveries. Belarus has been getting some Russian oil from private company Safmar, but it has been forced to buy more costly oil from sup- pliers such as Norway as well to keep its refineries running.
“We have built these [bilateral] good rela- tions [between Belarus and Russia]. We were the architects of these relations. Are we the ones to break them at the end of our political career?,” Lukashenko said ahead of the meeting with Putin. “We cannot be here forever. The question is what legacy we will leave.”
After the talks, Dmitry Kozak, deputy head of Russia’s presidential administration, said his
country would supply Belarus with gas this year under the same terms as it did in 2019. “The talks have been positive. We agreed to continue con- sultations... on the fine-tuning of the integration mechanism,” Reuters quoted Kozak as saying.
Belarus paid $127 per 1,000 cubic metres of Russian gas last year. While this is much less than what Russia’s other customers in Europe pay, Belarus had been hoping to secure a price similar to that charged to Gazprom’s clients in Russia, of $94-100 per 1,000 cubic metres.
The two sides were unable to make progress in agreeing a price for oil supplies.
Putin and Lukashenko also met two times in late 2019 to discuss oil and gas supplies. Com- plicating matters, Belarus is also demanding compensation from Russia for changes in its oil taxation system and damages relating to the Druzhba dirty oil crisis last spring.
The two countries are also discussing greater political and economic integration. Putin has said before that Belarus can only get further oil and gas concessions if it commits to the union project.
PROJECTS & COMPANIES
Rosneft shares dip as US sanctions loom
RUSSIA
Rosneft is taking Venezuelan oil as payment for debt.
SHARES in Rosneft fell 6.2% on February 7, on reports that the US is considering additional sanctions against the Russian oil giant for main- taining ties with Venezuela.
A senior official at the White House told reporters on February 5 that the US was pre- paring “crippling” and “impactful measures” to force Venezuelan President Nicolas Maduro from power. Washington is only halfway through its “maximum pressure” campaign against the Maduro regime, he said, and addi- tional sanctions on Rosneft are on the table.
“We are indeed concerned about the behav- iour of Rosneft in Venezuela; how we approach that is a question of internal deliberation which, obviously, I can’t address,” the official said.
Bloomberg reported on February 6 that the Trump administration planned to increase pres- sure on Madura over the next 30 days.
Rosneft, which has been under US sanctions since early 2014 following Moscow’s annexa- tion of Crimea, receives Venezuelan oil as debt
repayment. It then sells this oil onto buyers in Asia. Between 2014 and 2016, Rosneft entered into a series of prepayment deals with Venezuelan state oil company PDVSA worth $6.5bn for oil supplies. Rosneft also supplies Venezuela with gasoline and diesel, helping Maduro keep his grip on power in a nation suffering from inflation.
Officials at the US Treasury Department are wary that extra sanctions on Rosneft could cause a spike in oil prices, however, according to Bloomberg. Rosneft is Russia’s biggest oil and gas producer, flowing around 5.8mn barrels of oil equivalent per day (boepd). It is also the main shipper of Venezuelan crude, most of which goes to refineries in India and China.
Russia is also now the second biggest source of US oil imports since Washington imposed sanctions on Venezuelan exports. Russian sup- plies of oil and oil products to the US ramped up to 20.9mn barrels last October, the highest level since November 2011, according to the US gov- ernment.
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