Updated at 14:58,21-10-2016

Budget Revenues from Oil Refining Unaffected by New Terms of Russian Crude Imports

29-04-2010, 18:59

The contributions of Belarus' oil refineries to the state budget have not been affected by the new terms of the import of Russian crude oil, Deputy Economy Minister Anatol Filonaw told reporters in Minsk on Wednesday.

The contributions actually increased from 260 million rubels in the first three months of 2009 to about 480 million rubels in the first quarter of this year, Mr. Filonaw said.

Under an agreement enacted in February, Belarus will this year receive 6.3 million tons of oil duty-free for domestic consumption, but the rest of the amount to be supplied to Belarus will be subject to the full export duty rate unless the resulting petroleum products are brought back into Russia.

Belarus has recorded a $65-million surplus in foreign trade in petroleum products this year, Mr. Filonaw said, adding that 2009 saw a $74-million deficit.

At the same time it makes no economic sense for Belarus to refine oil subject to the full export duty rate, Mr. Filonaw said. Belarus has paid $258 per ton of duty-free oil this year and would be charged $520 if the full rate was applied, he explained.

Such oil could be profitably refined if domestic prices of petroleum products were raised by 70 percent and if the refineries had a processing depth of up to 93 percent, which would ensure a rather large output of light petroleum products, Mr. Filonaw said.

Nevertheless, the capacity at which the refineries are operating is 34 percent lower than last year because of the new import terms, he said.

In addition, the refineries reported losses in January because they were charged a full customs duty rate on oil imports and on petroleum product exports, he said.

Alyaksandr Lukashenka has directed that double taxation be avoided in the future and that the refineries be compensated for their extra expenses, Mr. Filonaw said. As a result, the Mazyr Oil Refinery recorded a profit in the first quarter of 2010, he said. Naftan reported losses of 0.5 percent but is expected to break even in the first four months, he said.

Belarus also intends to refine oil on "tolling conditions," Mr. Filonaw said, adding that talks on the matter were underway. Pilot shipments of such oil are expected to be supplied any time soon, he said.