Updated at 14:03,08-08-2022

Belarus Introduces Oil Transit Tax, May Halt Russian Oil Exports To Europe

TUT.BY / BelarusFeed

Belarus Introduces Oil Transit Tax, May Halt Russian Oil Exports To Europe
Photo: Reuters
Belarus introduced a tax on oil transportation and transit through its territory, setting it at 50% of profits, the president’s press service reported last week.

The new tax is motivated primarily by environmental concerns, the statement by Alexander Lukashenko’s office said.

“In order to create a source of funds for the mitigation of the environmental consequences of a potential accident on the main oil pipeline or other emergencies related to the movement of oil and oil products through the territory of Belarus, a tax has been imposed on organisations transporting oil and petroleum products across Belarus at a rate of 50% of profits,” the statement reads.

The environmental tax will also apply to the transit of oil and petroleum products across Belarus along key pipelines. In 2018, Gomeltransneft Druzhba pumped 60,4 million tons of oil, of which 58,8 million tons were delivered from Russia.

In another development, Belarus’ state oil company Belorusneft has temporarily suspended the export of its own oil this month as Minsk needs to compensate for shortages of Russia-sourced oil amid a contract terms dispute with Moscow.

Besides, Belarusian authorities may suspend the transportation of Russian oil to Europe via the Druzhba pipeline, reliable sources told TUT.BY. According to the sources, the move is necessary to diversify oil supplies to Belarus.

“There is already a draft decree, which, among other things, halts the transportation of oil through Druzhba to Europe,” the source added.

Oil deal saga

Recall that Russia halted oil supplies to Belarus due to differences in the price of raw materials. Minsk insisted on the abolition of the premium on the price of duty-free oil supplies, citing the rising cost of raw materials caused by Russia’s tax maneuver in the oil sector.

On the last day of 2019, Alexander Lukashenko held a meeting with the leadership of the Belneftekhim concern and instructed to begin supplying oil from alternative sources. First of all, by rail from ports in the Baltic, as well as alternative supplies via the Druzhba pipeline.

Moscow and Minsk had thus far failed to reach a deal on tariffs for the transit of Russian oil and petroleum products through Belarus, as Russia had asked for an oil price higher than the global average.

Russia supplies oil via the Druzhba oil pipeline to Poland, Germany, Slovakia, Hungary and the Czech Republic. The annual transit of oil through Belarus to Europe is 60 million tons. However, last year, the volume was less due to an incident with poor oil.

According to Belneftekhim, currently, the price of oil supplies from Russia is 83% of the world oil price. The size of the premium is 10 dollars per ton. Neither Minsk nor Moscow disclose the price of supplies.