Russian firms divert oil from Belarus as no 2020 supply deal signed

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FILE PHOTO: Russian President Vladimir Putin shakes hands with Belarusian President Alexander Lukashenko during a meeting in Sochi, Russia December 7, 2019. Sputnik/Mikhail Klimentyev/Kremlin via REUTERS

December 31, 2019

By Olga Yagova and Gleb Gorodyankin

MOSCOW (Reuters) – A new dispute over oil could be brewing between Russia and Belarus as Russian suppliers divert large volumes of crude to domestic ports in lieu of a deal on 2020 deliveries between the two countries, according to six industry sources.

Moscow and Minsk have had several oil and gas rows over the past decade in what has been described as love-hate relationship between president Vladimir Putin and Alexander Lukashenko.

Belarus is an important transit route for Russian oil and gas to Western Europe. Disruption of supply to Belarus has therefore often resulted in reduced or halted deliveries to countries such as Germany and Poland.

As of Dec. 31, Moscow and Minsk are yet to agree on oil supply and transit terms for next year, the Kremlin said.

“We propose not to discuss such apocalyptic scenarios,” Putin’s spokesman Dmitry Peskov told a daily conference call about the possibility of suspension of Russian oil transit through neighboring Belarus.

On Monday, Belarusian news agency Belta reported that Moscow and Minsk may sign an interim agreement outlining conditions for Russian oil and gas supplies to Belarus if they miss the Dec. 31 deadline for signing a full contract.

Russia and Belarus disagree on various issues regarding oil supply in 2020, but primarily over price.

Russian oil companies avoided preparing documents for supplies to Belarus starting from Jan. 1 and have already diverted volumes to other destinations, two sources familiar with the matter said.

Russian pipeline operator Transneft <TRNF_p.MM> and Russia’s Energy Ministry did not reply to Reuters requests for comment.

Belarus refiner Belneftekhim declined to comment.

EXPORT PLANS

Russian oil companies have to divert some 2 million tonnes of crude oil initially planned for Belarus to Russia’s sea ports and domestic market in January.

Several cargoes were added to January loading plans from Russian ports on Monday, increasing the Urals loading plan from Baltic ports to 6.3 million tonnes.

Transneft also may store some 500,000 tonnes of crude in its system, sources said.

A couple of oil firms diverted supply from Belarus to their Russian refineries, the sources added.

If supplies to Belarus remain suspended through January, Russian firms may add more cargoes to the loading plan after the New Year holidays. Moscow returns to work on Jan. 9.

Russia and Belarus have a long history of pre-New Year oil spats that have disrupted supplies to Belarus and Europe.

Minsk has repeatedly promised closer ties with Moscow and large assets sales to Russian companies before changing its mind and blaming Moscow for colonial policies.

Moscow has accused Minsk of siphoning off transit oil and gas in the past, accusations Belarus has denied.

For January 2020 Transneft has received confirmation from Belarus pipeline operator Gomel Transneft Druzhba that transit volumes will be supplied according to plan, two sources familiar with the talks told Reuters.

On Monday Russian President Vladimir Putin had a telephone call with Belarus leader Alexander Lukashenko, during which they discussed oil and gas supplies, but did not reach an agreement.

The leaders agreed to meet in the middle of January 2020 if necessary.

(Reporting by Olga Yagova, Gleb Gorodyankin; additional reporting by Andrei Makhovsky in Minsk, Polina Devitt and Vladimir Soldatkin in Moscow; editing by Jason Neely and David Evans)

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