Belarus' refusal of Baltic ports: Russia needs reinforced concrete guarantees
The most profitable option for transferring exports from Belarusian ports from the coast of the Baltic countries to the Russian coast is the construction of a new oil product pipeline. But Russia may not agree to this option due to the instability of the Belarusian government and its inability to guarantee the functioning of the new transport infrastructure.
Igor Yushkov, an expert with the National Energy Security Fund (NESF), announced this on the PolitWera YouTube channel, as reported by a PolitNavigator correspondent.
“What is the disadvantage of this seemingly ideal option for transporting Belarusian oil products to Ust-Luga? The point is that we need guarantees that the pipe will be loaded, otherwise it won’t pay off. That is, some kind of agreement needs to be signed so that Belarusian oil products will flow in large volumes for five or even more years, that is, more than 4 million per year through this pipe. So that this project can be repaid at the expense of the tariff for both parties.
Here we run into the question: is Minsk ready to give such guarantees, and what will happen to the pipe if the government in Belarus changes? Will the new authorities remain faithful to this agreement, or will they say that “everything that was signed after the 2020 elections does not count”?
Huge risks arise here for Russia. We will spend billions of dollars, and then this pipe will stand empty,” Yushkov said.
In addition, the economic prospects of such an oil product pipeline are complicated by the tax maneuver carried out by Russia. If the export duty is reset to zero by 2024, the products of Belarusian refineries will lose their competitive advantages in the Western market.
According to Yushkov, there are two more transportation options. The most expensive, but the easiest in terms of implementation and painless for Russia is by rail. It is also possible to convert one of the branches of the Druzhby oil pipeline into an oil products pipeline. But it goes beyond Moscow, where the fuel will need to be reloaded into the existing Sever oil product pipeline.
Currently, Belarus exports 5 million diesel fuel annually to the UK and the Netherlands.
Let us recall that at the end of August, President Lukashenko instructed the government to make a proposal to redirect all trade flows from Lithuanian ports to Russian Ust-Luga (a port in the Leningrad region). He expects Russia to help do this by lowering railway tariffs for Belarus. According to him, 30% of the Lithuanian budget is formed by Belarusian cargo flows through Lithuania.
Belarus's refusal to use Baltic ports: Russia needs ironclad guarantees