Source of light Oil

Belarus extract oil and gas in Russia?
Belarus has discussed opportunities to extract oil and gas in Russia since the early 90s. Last year the state leaders agreed that the issue was bound to have a positive resolution; however, it is for economic entities of the two countries to decide. It is now time for decision-makers to negotiate, but these talks may prove quite hard.

In many economic unions in the west and south — in Western and Southern Africa, ASEAN and the Caribbean Union — the participating states share not only natural deposits, but also processing companies. The same is true for the recent initiative of Sudan, Yemen and Eritrea to establish the Association of the Red Sea States.

The deputy chairman of the Belneftekhim holding, Mikhail Osipenko, has confirmed that Belarus plans to buy two oil fields in Russia with an annual debit of 15 million tonnes each. However, Belarus is not willing to pay the price set by Russian sellers.

— In order to have the real value of the fields we have sent specialists of Belarus’ only oil producer Belorusneft to Russia to conduct prospective work together with Russian colleagues, Mikhail Osipenko said.

For Belarus it would be more profitable to produce the so-called light oil that is cheaper to extract and is compatible with Belarusian oil. Light oil extracted in Russia could be mixed with Belarusian oil and processed here, so Belarus will be able to remain unaffected by the possible rise in Russian crude prices.

Analysts are not so certain that the Russian oil and gas business will be reluctant to raise extraction fees and charges to deliver Belarusian oil to Belarus. There is no official response, but the two countries are now in talks over the future tariff on oil transportation to the Belarusian state border.

Russian companies that deliver oil to Belarus and export oil through this country are exempted from payments of the Belarusian customs duty, which stands at $200 per tonne. At the same time, smaller export duties on oil products encourage Russian oil companies to have their crude processed in Belarus and increase export through the territory of this country. Belarus hopes Russia will take these preferences into account and reduce the price of the oil fields in question.

Irina Trofilova
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