Ukraine has suspended imports of biodiesel from Belarus

Ukrainian oil traders have suspended contracts with Belarusian biodiesel suppliers in anticipation of changes in conditions of imports of biodiesel fuel.

"Now, contracting of September volumes of imports of biodiesel fuel is suspended by Ukrainian traders, but this is a temporary situation. The question isn’t about a complete cessation of biodiesel fuel exports to Ukraine: the product is important enough for the market to abandon it completely", - told the agency "Interfax-West" a participant of the Ukrainian market of petroleum products.

At the same time, he noted that now governmental bodies of Ukraine are studying the possibility to protect Ukrainian manufacturers of petroleum products and developing a package of anti-monopoly measures. "The result of this work may be either the establishment of some local import duties on biodiesel fuel, or an increase in excise taxes. It is clear that this will change the pricing policies of traders, that is why contracts for September are suspended", - said the interlocutor of the agency.

He stressed that at the present time the situation on Ukrainian oil products market "is calm and stable, there is no panic or anticipation of fuel shortages in the light of termination of deliveries of Belarusian biodiesel fuel".

"There was an increase of the market price of Belarusian oil products in recent days by 5-10%, but these are seasonal variations", - said a representative of a trader company.

The source also said that even in the absence of biodiesel fuel in September, Belarusian deliveries to Ukrainian fuel market will not suffer.

"If there are no supplies of oil products from Belarus private trading companies in September, more product will be sold by Belarusian state organizations, that is, Belarusian oil refineries", - he said.

The agency's interlocutor noted that Mozyr refinery will be stopped for repair in September. Although this refinery has traditionally been a major supplier of Belarusian petroleum products to Ukraine, it will not cause any fluctuations on the Ukrainian market. "Mozyr oil refinery is now accumulating export volumes; also will take place a refocus on the production of the second Belarusian oil refinery - "Naftan"”, - he said.

Meanwhile, profiled Ukrainian media reported previously, citing their own anonymous sources, that Belarus in September can stop its deliveries of improved diesel fuel and biodiesel fuel to Ukraine completely. According to media reports, in May-August such deliveries amounted to 150-180 tons per month. In the second quarter of 2012 the share of Belarus' imports of diesel fuel in Ukraine exceeded 60%.

The sources explained the suspension of supplies by the reluctance of traders to participate in risky schemes of duty-free exports of sublimated petroleum products from the territory of the Customs Union.

Diesel fuel with improved performance and biodiesel fuel are not included in the list of petroleum products, subjected to export duties on exportation from the territory of the Customs Union.

Thus, traders are free to export them from Belarus.

A similar scheme was used by Belarusian private oil traders to export solvents, diluents and lubrication oils, produced from naphtha - gasoline, imported free of duty to the republic from the Russian Federation in the framework of Customs Union agreements.

This scheme has caused serious concern of the Russian government and led to investigation at a high level. Currently, Russian import of naphtha to Belarus is suspended.