October 11, 2018 / 2:52 PM / 2 months ago

Exclusive: Russia to suspend light, heavy oil product exports to Belarus from November

MOSCOW (Reuters) - Russia plans to halt exports of light and heavy oil products to Belarus from next month until the end of next year, with restrictions also applying to shipments of liquefied petroleum gas (LPG), two Russian government sources told Reuters.

FILE PHOTO: A general view shows the Novorossiysk Fuel Oil Terminal in the Black Sea port of Novorossiisk, Russia May 30, 2018. REUTERS/Natalya Chumakova/File Photo

Russia, Belarus and Kazakhstan have a duty-free arrangement under which Moscow has been sending crude oil and oil products to Minsk with no export fee. Belarus then re-exports some of those goods, pocketing the associated charges.

Russia has used cheap energy exports and loans to Belarus as a way of keeping its former Soviet neighbor in Moscow’s geopolitical orbit, but the arrangement has become harder to sustain as Russia’s budget tightens.

On Wednesday, Russia and Belarus signed amendments to intergovernmental agreements regarding exports of oil and oil products from Moscow to Minsk, according to Russian Energy Ministry data.

The two government sources told Reuters that exports of light oil products such as gasoline and diesel, as well as heavy oil products and LPG - also used in the petrochemical industry - would be suspended after the revised agreement.

The sources said Moscow would not cut exports of products Minsk does not produce itself - for example, certain oil products used in petrochemicals. One of the sources said exports of crude oil also would not be revised.

The Russian Energy Ministry declined to comment, redirecting questions to Ilya Dzhus, spokesman for Deputy Prime Minister Dmitry Kozak, who oversees the energy sector in government.

Dzhus told Reuters on Thursday that Moscow would suspend exports of heavy oil products to Belarus but declined to elaborate on other oil products.

Moscow supplies Belarus each year with around 2 million tonnes of duty-free oil products but wants to cut that to 100,000-300,000 tonnes, the Russian Finance Ministry has said.

Reuters reported in July that Belarus, often seen as a buffer between Moscow and the rest of Europe, has capitalised on a general aversion from trading with the Kremlin to become the largest re-exporter of Russian LPG.

Additional reporting by Maxim Nazarov, Olesya Astakhova and Polina Nikolskaya; Writing by Katya Golubkova; Editing by Dale Hudson

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