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Minsk is planning to increase state subsidies to deliverers of the Russian oil to Belarus by railway. The Belarusian government considers that this will help to increase oil deliveries to the national oil refineries which have been almost idling of late.

Presently oil delivered to the Belarusian national oil refineries by railway is too costly. The ton of oil delivered through the pipe line costs USD 375(less VAT) and if it is shipped by railway it goes up to USD 397, it was specified to the Nezavisimoya Gazeta at the Belneftekhim concern. That may result in decreasing of the oil demand stipulated by the oil balance signed by both parties by 4 million.”Minsk fears that it can cause cutting off the oil quota for Belarus by the Russian party for next year”, the power engineering expert Tatstsyana Manenok commented on the close attention paid by the Belarusian government to the oil shipped by railway.

It is to be mentioned that the state subsidies for oil deliverers were introduced by the Belarusian government after the oil delivery conditions have bee changed by the Russian side. The duty was imposed on oil delivered to Belarus and the duty on oil and petrochemicals exported to Europe was raised up to the Russian level. Thus the oil refining at the Belarusian enterprises became unprofitable for the Russian providers. In the first quarter of 2007 the Belarusian national oil refineries were caused to by crude oil themselves for loading the production capacities. Meanwhile the government was developing the means for attracting the Russian providers. Thus, the Russian companies started getting subsidies from the Belarusian budget. The subsidy accounts for 90% of the custom’s duty per 1 ton oil. The custom’s duty is the reference value and it depends on the custom’s duty on oil exported from Russia overseas which presently amounts to USD 65.6 per ton. Consequently USD 59 of this amount is to be compensated by the Belarusian budget. The project drafted by the Belarusian government presumes that the compensated amount for oil delivered by railway will gain 127% of the import duty , i.e. USD 83.3 per ton , and for oil from the pipeline- 11% , i.e. USD 72 per ton. The government experts have calculated that in this case the profit of selling the petrochemicals produced of oil shipped by railway and then exported is likely to comprise USD 13.7-17.5 per ton and in case of oil from the pipe line it will amount to USD 5 per ton.

Moreover, under the present conditions even 90% subsidy will not make refinery process of provided oil efficient .The losses comprise 13% per ton if oil is delivered through the pipeline. That is why the Russian providers refused to deliver oil to Belarus in August. “The Belarusian oil refineries are still profitable but this year gains are incomparable to those of the past year”, Manenok says. According to the expert, the profit of the Belarusian oil refineries decreased 10 times if compared to the last year. In this case even state experts say that if nothing changes then the Belarusian government will have nothing to do but to sell the enterprises out.