2013 oil agreement with Russia becomes main concern for Belarusian government.
Belarus has requested 23 million tons of oil in 2013. Regardless of statements made by negotiating officials, the agreement on oil supply volumes in 2013 was not achieved. Given the impact of petroleum industry on the Belarusian economy, any potential reduction in the oil supply could result in problems in the foreign exchange market.
On November 20th, 2012 Prime Minister Myasnikovich confirmed there was a problem with oil balance in 2013.
Oil refining industry is critically important for Belarus. Belarusian petroleum exports account for 32.5% of all exports. Oil industry makes 21.5% of industrial output and 19.1% of net proceeds. Any reduction in oil refining reduces Belarus’ economic indicators. The parameters of the socio-economic development in August-October 2012 confirm this.
Annually Belarus invests hundreds of millions of dollars in refining industry. Belarusian refineries were tasked to achieve the oil processing depth up to 92-93% by 2015. Without full capacity utilization, modernization plans will fail, and the economy will not get additional revenues. In addition, significant financial resources, which have already been invested the upgrade, will be wasted.
In 2012, according to energy supply agreements with Russia, Belarus was to receive 21.5 million tons of crude oil for processing at Belarusian refineries. Half of this volume was supposed to be supplied free of charge to be processed in Belarus for Russian oil companies. The 2012 crude oil plan will not be implemented in full because of the reduced supply in Q4 of 2012. The reason for reducing the oil supply is believed to be the undersupply of oil products to Russia.
Thus, oil supply to Belarus in 2013 might be reduced down to 18 million tons and a part of the processed oil will be returned back to Russia. All this could result in lower capacity load, reduced amounts of taxes paid to the budget, a significant slowdown or even suspension of refineries’ reconstruction and, as a result the overall failure to meet the main parameters of socio-economic development in 2013.