July 10, 2018 / 9:57 AM / 8 months ago

Belarus gains from Russia's political disputes to grow big in fuel re-export

MOSCOW/MINSK (Reuters) - Belarus, often seen as a buffer between Moscow and the rest of Europe, has capitalized on a general aversion from trading with the Kremlin to become the largest re-exporter of Russian liquefied petroleum gas (LPG), trade data and official statistics show.

Belarus ranked only fourth, behind Poland, Ukraine and Finland, in LPG supplies from Russia by land until 2017. It became the leader this year in Russian LPG rail imports, which far exceed its domestic demand.

Russian energy supplies have become increasingly politicized after Russia annexed Crimea in 2014 and a pro-Moscow rebellion flared in eastern Ukraine.

LPG exports from Russia have also been hampered by Moscow’s decision to classify the fuel as dual-purpose, meaning it can be used for both civil and military means. That has diminished LPG supplies to Ukraine, one of its key consumers.

Russia raised LPG rail exports to Belarus to a record in May, outpacing those to Poland, which is typically the main receiver of Russian LPG, statistics showed.

Rail LPG shipments from Russia to Belarus in May amounted to 107,375 tonnes compared to 86,220 tonnes sent to Poland, according to traders and government statistics.

LPG imports from Belarus also helped Ukraine to save face while meeting domestic demand by not buying the fuel directly from Russia.

“Russian companies either register here (in Belarus), or work through Belarusian companies to avoid (curbs). It allows them to supply LPG to Ukraine,” an LPG trader said.

LPG rail exports from Russia to Belarus in the second half of 2017 grew by 60 percent to 56,000 tonnes per month compared to the first half of the same year.

In January-May of this year the deliveries grew to 79,000 tonnes per month, statistics showed.

In comparison, average monthly LPG exports from Russia to Belarus in 2015-2016 were only about 20,000 tonnes respectively.

LPG, or propane and butane, is usually cheaper than many other kinds of fuel, such as gasoline. It can be used in cars, as a petrochemicals feedstock, and to produce electricity.

LPG exports from Belarus last year grew to 637,000 tonnes from 436,000 tonnes in 2016, according to the local statistics service. Domestic demand stayed almost unchanged in 2017 at 145,000 tonnes, figures from the Joint Organisations Data Initiative showed.

Additional reporting by Natalia Savrasova in MOSCOW; Writing by Anna Bakhtina and Tatiana Vodianina; Editing by Kevin O'Flynn, Vladimir Soldatkin and Dale Hudson

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