Belarus wants to raise tariffs for oil transit via Druzhba

Belarus, which has lost income from the transit of Russian oil through the northern branch of the Druzhba oil pipeline due to sanctions, wants to compensate for the losses. Minsk plans to raise the tariff for pumping through the northern and southern branches of the pipeline. If the offer is approved, supplies will rise in price not only for Germany and Poland, where only Kazakhstani oil is currently supplied, but also for the Czech Republic, Slovakia and Hungary. As a result, experts believe, all these countries may start looking for alternative sources of raw materials.

As it became known to Kommersant, the operator of the Belarusian section of the Druzhba oil pipeline, Gomeltransnafta Druzhba, on May 26, turned to Transneft with a proposal to increase oil transportation tariffs by 84% from July 1 to the current level. As indicated in the letter, a copy of which Kommersant has, the increase will ensure the break-even operation of the company in 2023 and preserve the possibility of further development for it. In Transneft, Kommersant confirmed receipt of a letter from the Belarusian operator, refusing to comment in detail.

The Druzhba oil pipeline runs through Russia to the Belarusian Mozyr, and in Belarus it branches into two lines: the northern one goes in the direction of Poland and Germany, and the southern one goes through Ukraine to the Czech Republic, Slovakia, Hungary and Croatia. As Kommersant’s sources explain, the tariff increase is expected in both directions.

So Belarus is trying to compensate for the loss of volumes in the northern direction after Germany and Poland stopped importing Russian oil at the beginning of the year and began buying oil from Kazakhstan in much smaller volumes. In general, by the end of the year, supplies from Kazakhstan are unlikely to exceed 1 million tons, which is about 20 times less than previously supplied from Russia.

Gomeltransnafta Druzhba noted that this year, due to sanctions from Europe, the supply of Russian oil through Belarus has significantly decreased. In particular, cargo turnover for the first three months of the year in transit directions turned out to be 38.6% lower than the level announced by Transneft during the planned revision of tariffs, and in the direction of Poland and Germany – by 55.2%.

In general, in January-March, pumping through the Druzhby system fell 4.7 times, including in the direction of Poland and Germany – 12.1 times compared to the level of the previous year. In January-June, the negative dynamics will continue (decrease by 5.3 and 16.6 times, respectively). At the end of the year, Minsk predicts a drop in the level of oil transit by 45.9% relative to the indicators announced during the revision of rates, and in the direction of Poland and Germany – by 71.2%.

The letter from Gomeltransnafta Druzhba states that the decrease in cargo turnover leads to unprofitability of the company: in the first quarter, the loss amounted to 329 million rubles, and in the first half of the year it could grow to 1.26 billion rubles. At the same time, the company is trying to increase efficiency by re-increasing tariffs for domestic transportation of oil to Belarusian refineries and optimizing the number of employees.

A similar request to increase the tariff has already been made by Ukrtransnafta, the operator of the Ukrainian section of Druzhby. The company applied for a two-stage increase in transportation prices from the current €13.6 to €21 per ton from August 1, but in the end, Kyiv managed to agree on an increase of only 25% from June 1, to €17. This is the second increase in the rate since the beginning of the year: since January 1, the tariff in the direction of Slovakia and Hungary has increased by 18.3%, to €13.6 per ton.

According to Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation, the demands of Belarus, taking into account the sharp drop in pumping along the northern branch, are logical. In fact, the country was faced with a choice: to raise the tariff several times only on the northern branch, where pumping dropped sharply, or to increase it not so much, but on both branches. In the first case, it will become unprofitable for Kazakhstan to supply its oil through Druzhba, and supplies will most likely be deployed to Ust-Luga, from where oil will be exported by sea. In the second case, the increase in the cost of pumping makes deliveries through Belarus less attractive for consumers on the southern branch, who will begin to think about alternatives.

Olga Mordyushenko