Page 29 - BELRptOct18

9.0 Industry & Sectors 9.1 Sector news
9.1.1 Oil & gas sector news
Belarus might cut its purchase of Russian gas by 3.5bcmpa (approximately 18.5% of total) by 2022 following the commissioning of Belorusskaya (Ostrovetskaya) nuclear power plant that is currently under construction and has aggregate design capacity of 2.4GW. The first power unit is due to be commissioned in Nov 2019, pointing to reducing gas supplied by Gazprom to Belarus as of 2020. Gazprom currently supplies gas to Belarus under a special contract with an export-duty free price that is now around $129/mcm. This is significantly below the European export price of $238/mcm in the second quarter of 2018, but above the domestic gas tariff in adjacent Smolensk region especially after the ruble devaluation. Belarus's gas price has always been a matter of dispute between Russia and Belarus. Gazprom supplied 19bcm to Belarus in 2017 out of a total of 34bcm to FSU countries, ranking Belarus the largest recipient. Gazprom losing 3.5bcmpa in Belarus is the equivalent of less than 1% of 2018E revenue, i.e. immaterial for Gazprom, especially given that this will happen only in 2022.
The Belarusian government believes that it is more profitable to ship oil products via Baltic states than Russian ports , Sergei Grib, deputy director general of Belarusian Oil Company said on September 20. "We get proposals to ship the products in the direction of Russian ports but right now we get better prices if we deliver via Baltic ports than Russian ones," BELTA news agency quoted Grib as saying. He added that the Belarusian Oil Company does not limit the Russian direction when the company needs to deliver oil products. "We offer a complete set of options to customers. Customers choose what they want depending on their capabilities and needs," Grib said. According to him, roughly 40,000 tonnes of oil products has been shipped via Russian ports so far this year. Belarus is going to export up to 1mn tonnes of oil products via Russian ports in 2018, according to deputy head of the nation's state conglomerate Belneftekhim Andrei Rybakov. The move followed growing Moscow's pressure on Minsk over the transportation of Belarusian petroleum products via Russian seaports. In 2017, Russian President Vladimir Putin urged the government in Moscow to create conditions for the supply of Belarus-made petroleum products to customers abroad using Russian seaports. Currently, Belarusian oil refineries exclusively receive Russian crude that is processed in Belarus’s two modern refineries. In 2017, the two countries reached long-term agreements on oil deliveries of 24mn tonnes per year to Belarus through 2024. Belarus will keep 18mn tonnes out of 24mn tonnes for processing at its two state-controlled refineries in Belarus: Naftan and Mozyr Oil Refinery. The agreements followed a months-long dispute between Minsk and Russia's natural gas giant Gazprom, which also hit Moscow's oil supplies to Belarus. Since mid-2016, Russia supplied 40% less oil to Belarus. According to Minsk, Russian crude oil supplies to Belarus in 2016 declined by 20.8% year-on-year to 18.1mn tonnes.
Russia's exports of petroleum products to Belarus declined by 18.4% month-on-month to 237,000 tonnes (35.1% comparing to June), Belarusian
29 BELARUS Country Report October 2018 www.intellinews.com