Belarus proposed raising tariffs for oil transit to Europe from February 1, 2024

As Kommersant found out, Belarus has proposed a new option for indexing tariffs for oil transportation across its territory to Europe. For the northern branch of the Druzhba oil pipeline, which currently carries only Kazakh oil, Minsk proposes to increase the tariff by 43%, and for the southern branch, which continues to supply oil from Russia, by 14.5%. The previous proposal implied an increase in tariffs on both lines by 1.8 times and did not suit Russia. Transneft indicates that they are ready to discuss tariffs in the southern direction, but their coordination on the northern branch is not within the company’s competence.

As Kommersant learned, the operator of the Belarusian oil transportation system Gomeltransneft Druzhba sent a letter to Transneft on November 17 with a proposal to raise tariffs for oil transit through its territory from February 1, 2024. Thus, the cost of pumping along the northern direction Unecha-Adamovo (which goes through Belarus to Germany) is requested by the Belarusian side to be increased by 43.4%, to 653.8 rubles. per ton, and on the southern branch of Unecha-Brody (via Belarus and Ukraine to Hungary, Slovakia and the Czech Republic) – by 14.5%, to 195.8 rubles. per ton. As explained in the letter, this is necessary to eliminate cross-financing of the costs of transporting oil along the northern branch at the expense of pumping along the southern one. Thus, the specific tariff for the system will be 104.3 rubles. per 100 km.

The letter notes that “unforeseen circumstances” led to a decrease in cargo turnover on transit routes by almost five times compared to 2022, including at Adamovo – by 17 times. We are talking about the refusal of Poland and Germany to accept Russian oil amid the imposition of sanctions. At the moment, only oil from Kazakhstan flows to Europe along the northern branch of the Friendship, the forecast volume for this year is 1.2 million tons. To ensure a positive financial result, tariffs for internal transportation of oil to Belarusian refineries (pumping will amount to 14.2 million tons in 2024) were revised twice in 2023 (with an average increase of 43%), the document states. At the same time, the costs of maintaining the republic’s pipeline system are planned for 2024 at the level of 6.6 billion rubles, investment costs – 3.1 billion rubles.

Transneft confirmed receipt of the letter to Kommersant. “Tariffs are set in rubles, and, of course, we must take into account inflation,” company representative Igor Demin told Kommersant. “We are ready to discuss changing them on the southern branch of Druzhba, which transits Russian oil to Hungary, the Czech Republic and Slovakia. But our colleagues want our agreement on increasing tariffs on the northern branch, where oil from Kazakhstan is pumped in transit to Germany, and this is not our competence, especially since significant growth is expected there.”

Previous proposals from Belarus were to increase the tariff by 1.8 times from July 1 for both the northern and southern branches of Druzhba. At the beginning of November, Russian Energy Minister Nikolai Shulginov said that negotiations on this “are still on pause,” and in the summer he stated that Belarus’ proposals did not suit Russia very well. According to Kommersant’s source, an increase in the tariff by 1.8 times is now not being considered. Tariffs for pumping oil through Belarus have already increased by 9% since February 1.

The current version of tariff indexation will largely affect not Russian, but Kazakh oil, while the Kazakh authorities or local oil companies are not participating in the negotiations. “Kazakhstan is not participating in the discussion because the pipeline is not theirs. Kazakhstan can then decide whether to pump more or less,” Nikolai Shulginov said in November.

Kirill Rodionov, an expert at the Institute for the Development of Fuel and Energy Technologies, notes that the Belarusian side is trying to compensate for the decrease in pumping volumes by increasing the tariff. According to the Central Dispatch Department of the Fuel and Energy Complex, the volume of oil pumped to Germany along the northern line of Druzhba in October amounted to 99.8 thousand tons, and to Poland was equal to zero, while in October 2022 it was 1.2 million tons and 510 thousand. tons respectively. Supplies on the southern branch remain at approximately the same level as last year: although purchases from the Czech Republic and Slovakia have fallen, they have increased from Hungary. The expert recalls that sanctions have worsened the economy of Belarusian oil refineries, and the country has also lost part of its transit revenues due to the suspension of gas transportation via the Yamal-Europe pipeline.

Olga Mordyushenko