(Reuters) - Russia suspended oil supplies to Belarus on Jan. 1 in a row over supply contract terms between Moscow and Minsk. Two mid-sized oil firms partially restored supplies on Jan. 4, enough to keep Belarus refining volumes at minimum levels this month.
How strong is the economy of Belarus, an ex-Soviet country of 9.5 million people with which Moscow seeks deeper political and economic integration and why the dispute matters at all?
WHY IT MATTERS?
Belarus is a major transit route for Russian oil and gas to Europe: the Druzhba oil pipeline carries around 1 million barrels of oil per day (bpd) and the Yamal gas pipeline delivers 33 billion cubic metres of gas to Europe annually.
Energy spats in the past have caused disruptions to oil flows to Europe but so far in 2020, transit has been unaffected.
HOW STRONG BELARUS IS?
Belarus earns around $2 billion a year from re-exporting some of the Russian oil and oil products it gets from refining Russian oil. Minsk receives other subsidies and loans from Moscow, as well.
But as Russia gradually changes the way it taxes its own oil industry, this directly affects Belarus budget revenue: in November, the Belarus finance ministry estimated a budget shortfall of $850 million this year due to Moscow’s taxation overhaul.
Belarus is also a small oil producer, sending around 100,000 tonnes of oil per month to Germany. Minsk stopped its own oil exports in January as it needs to feed its own refineries. It has also temporary suspended oil products exports to Europe.
Overall, the Belarus economy is expected to grow 1.9% this year, with the central bank holding $9.4 billion in gold and foreign exchange reserves, including 42.2 tonnes of gold, as of start of this year.
HOW MUCH BELARUS NEEDS TO REPAY THIS YEAR?
This year, Belarus needs to repay $2.5 billion, both internally and externally, of which bonds are worth $440 million and 760 million euros. Bonds worth $98 million are due in February.
Belarus is borrowing in foreign exchange at home, too. Minsk plans to raise $1.35 billion in bonds, both at home and outside the country, to refinance the debt this year.
The country’s finance ministry told Reuters it has the necessary resources, including gold and forex reserves, to meet all debt obligations this year.
Compiled by Andrei Makhovsky in Minsk; Writing by Katya Golubkova; editing by David Evans
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