Belarusian foreign trade performance will be put through the test with solvents

Termination of naphtha supply, which was used to produce Belarusian ‘innovative solvents’ may jeopardize the trade surplus Belarus has achieved for the first time in many years.

On July 24^th naphtha supply to Belarus was suspended, it was used to produce solvents, which were further exported duty-free within batch 38.

These actions by the Russian government are meant as counteractions against Belarusian counterparts, which were reasonably suspected of re-export of Russian oil products.

Positive trade balance in January – May 2012 was USD 1,513.7 million. This figure does not include export duties on petroleum products, paid to the Russian budget. During the same period, Belarus exported 2.41 million tons of solvents worth USD 2,181 million. Given the increased export duties on naphtha (90% of oil duties), independent analysts estimate the potential unpaid fees exceeding USD 1 billion.

Moreover, there were problems with deliveries of Belarusian biodiesel produced by “Triple-Energy”. Ukrainian petroleum market players were informed about the termination of biodiesel supply as of September 2012. In the first half of 2012 Ukrainian deliveries of biodiesel were over 600,000 tons duty free.

The sequence of events (Mr. Medvedev’s visit to Belarus, the termination of naphtha supply and seized supply of biodiesel to Ukraine) suggests that verbal threats concerning seizure of possible illegal re-export schemes entered their practical implementation.

Thus, if all illegal Russian oil re-exports schemes are cut off (export of Russian oil as solvents, lubricants, biodiesel), the Belarusian trade surplus could vanish even without paid petroleum duties and the Belarusian foreign trade would fall in conventional negative values.