Belarus’ Lukashenko Can’t Get Anyone to Sell Him Oil at Anywhere Close to Prices He Rejected From Russia

Nobody is interested in granting him even the 17 percent subsidy that he started a dispute over with Moscow

Editor’s note: I was under the impression Russia had cut subsidies for Belarus entirely and that this triggered the current dispute, but The Jamestown Foundation (Reagan era anti-Soviet think-tank) explains that’s not the case. Lukashenko started a dispute with Moscow simply because the subsidy had been reduced to 17 percent.

Belarus’ refining sector built in the 1980s USSR refines far more oil than Belarus needs for internal consumption and is a key source of Belarus export earnings. Additionally, Belarus is actually able to buy up more discounted Russian oil than is its refining capacity that it re-exports at a hefty profit.

Belarus continues to scramble in search of alternate oil sources two months after its traditional Russian suppliers halted flows through the Druzhba Pipeline (see EDM, January 22February 13). The five suppliers that have provided Belarus with 90 percent of its oil for years cut off their exports on January 1. Since then, Belarus’s state oil company Belneftkhim has signed purchasing agreements with companies from Azerbaijan and Norway—and with non-traditional Russian suppliers—to try to make up the 18 million tons of crude a year it is losing.

Azerbaijan’s state oil company SOCAR has already agreed to supply 160,000 tons of oil to Belarus, and Belarusian Prime Minister Sergei Rumas met with SOCAR officials on March 2 to discuss additional purchases (, March 3). Belarus will import SOCAR’s crude through a pipeline running from Ukraine’s main Black Sea port of Odesa to Brody in northwestern Ukraine. The oil will then be sent north to Belarus’s Mozyr refinery, a joint venture of the Russian oil giants Rosneft and Gazpromneft.

Belarus and Russia have tried several times to resolve what is ostensibly a pricing dispute but is really about Minsk dragging its feet on joining a federation with Russia [Doubtful.], a move that would (de facto or de jure) eliminate Belarus’s independence. The talks have included several one-on-one meetings between Presidents Alyaksandr Lukashenka and Vladimir Putin.

Belarus wants its traditional suppliers, such as Rosneft, Gazpromneft, Surgutneftegaz and Tatneft, to remove a $10-per-barrel premium on the price they charge for crude. The four demanded the premium after Moscow exempted Belarus from paying export fees on Russian oil. At one point, the Russian exporters were losing $10 a barrel from having to absorb the export fees themselves. But Russia has since shifted its tax on crude from exporters to producers, prompting Belarus to contend that the premium it has continued to pay is no longer necessary.

Belarus used to receive Russian crude at prices far lower than the rate Moscow charged all other global customers. But it has raised prices to the point that Belarus says its discount is now only 17 percent. This means Russia should eliminate the premium, Minsk maintains. Putin appeared to offer a $2-per-barrel discount in a February 21 phone conversation with Lukashenka (, February 21), but different interpretations of his proposal mean the price standoff has persisted (, February 21).

Although Belarus and Russia have had many oil and gas price disputes in recent years, the current Druzhba supply disruption is now the longest since 2004. A curious wrinkle, however, is that the Kremlin is allowing non-traditional Russian suppliers to deliver some of the supply that Belarus has lost.

First to step in were the sister companies owned by oil magnate Mikhail Gucheriev. His firms Safmar and Neftis agreed, on January 2, to send 750,000 tons to Belneftkhim. They have delivered some of the oil through the Druzhba Pipeline and some by rail (, February 5). Since then, Russia’s RIA Novosti news organization has reported that UDS NEFT, Yanqpur and Tatneft also want to supply up to 1 million barrels of crude a day to Belarus (Interfax, February 21).

Meanwhile, US Secretary of State Michael Pompeo told Lukashenko in a meeting in Minsk, on February 1, that the United States would supply all of the oil and natural gas Belarus needs to help it maintain its independence from Moscow. In turn, Lukashenka expressed hope that the US would arrange low-cost loans for an oil pipeline running from the Baltic Sea through the Baltic States and into Belarus (, March 3).

Belarus is also working with Ukraine to bring the Odesa–Brody Pipeline online again. It has been idle since 2011 because oil delivered through it would have been much more expensive than oil pumped through the Druzhba. In a sign of how serious Belarus is about restarting the Odesa–Brody route, Minsk has established a fee schedule for the 40-kilometer stretch of pipeline that would need to be built from Brody to the Mozyr refinery (, February 27).

Since the Russian shutoff on January 1, Belarus has been able to find limited alternative crude supplies for its refineries, whose exports of finished petroleum products are the lifeblood of the Belarusian economy. But the price of crude from those new sources has, in every case, been much higher than from Belarus’s traditional Russian suppliers.

In addition, the volumes procured from those alternative sources has not been high enough to keep Belarus’s refineries at Mozyr and Naftan running at capacity. In January and February, the two processed 1.8 million tons of oil—half of what they did during the same period in 2019 (, March 3).

The price standoff with Moscow is also depriving Belarus of income from the 6 million tons of Russian oil a day that it usually re-exports.

Finally, the contracts with alternative suppliers have so far all been short term, a sign that Belarus does not intend to replace Russian deliveries for good. As long as all that remains the case, Moscow will be able to maintain a tough position in the price talks, perceiving that Minsk lacks leverage.

Source: The Jamestown Foundation

  1. stevek9 says

    Already out of date … what will the oil price war mean for this dispute? Anyone?

  2. thomas malthaus says

    As oil prices drop further and the world draws itself into a depression, Belarus will lose its Russian subsidies and be absorbed into Russia’s Federation.

    Lukashenko will forced out and will probably retire to Malta.

  3. JustPassingThrough says

    Lukashenko is slowly running out of Lu(c)k.
    Don’t poke the bear, dummy.

  4. CHUCKMAN says

    I don’t think Lukashenko can be discussed in completely rational terms.

    He definitely has Erdogan-like tendencies.

    And I do think forms and degrees of insanity are more common in national leadership than we like to credit.

    Look at the upcoming US election. Out of 330 million people, the best the two national parties can come up with is Biden and Trump, neither of whom is entirely rational.

    1. bob says

      I’ve just read your blog about Putin

      You really are a total moron

      1. Peter Ferguson says

        Not sure how old you are, but going by all your comments you are either, 80 puss or a late teen. Trying to be polite you seem to have an IQ on world events of (being generous) maybe 20. But I think you get your thrills from trolling reality, maybe you need a date with areal person to bring you back to reality.

        1. bob says

          He sounds like someone from the thirties,chuckman that is

          I’m referring to the flowery garbage he wrote on his own blog

          I’ve no doubt you’d love it,as you’re obviously just as stupid

          back in the thirties there was plenty of idiots who waxed lyrical about
          Stalin and Hitler,chuckman sounds just as stupid

          Mind you,you’re not much better if you think you need to be in your eighties to have been alive and cognizant of events back in the late 70′ s through to the end of the evil empire,USSR!

          I don’t get any thrills from trying to put idiots right about Putin,his rotten regime,i actually find it very depressing that we live in a world and time when so many people can be taken in by propaganda from authoritarian/ totalitarian regimes,essentially pro fascist states with nothing positive to contribute,like Russia and Syria and Iran

          Stalin and Hitler must be smiling that such idiots as chuckman are buying into such twisted trash

      2. CHUCKMAN says

        Really, is that the best you can come up with, Tel Aviv?

        Just curious, are you one of the IDF team that does this kind of stupidity full time?

        Or one of the unemployed Israel students Netanyahu’s pathetic government pays by the piece?

        1. bob says

          No just a normal bloke

          A normal bloke old enough to know not to be taken in by kremlin BS propaganda

          Unlike your good self, who’s gone gulping down Kremlin propaganda like there’s no tomorrow

          You should concentrate whats left of your feeble mind on what the kremlin are doing than building imaginary conspiracy nonsense in your silly head about people who, me ,know better than you

  5. Séamus Ó Néill says

    Adage no 1… can’t have your cake and eat it !
    Adage no 2… don’t bite the hand that feeds you !

    1. ourblue says

      May I add a third? Realising on which side the bread is buttered.

  6. David Chu says

    Beggars cannot be complainers! What the hell is wrong with Belarus?!?

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