Belarus cuts Russian oil imports, ups Venezuelan

By Gleb Gorodyankin

MOSCOW, July 15 (Reuters) - Belarus is increasing its oil imports from Venezuela, spending much more than it would on crude from neighbouring Russia, as Minsk is desperate to diversify supplies because of strained relations with Moscow.

Traders said Belarussia's Mozyr refinery will slash imports of Russian Urals crude by 55 percent in July as this is being replaced by Venezuelan oil.

Separately, Belarussian statistical data showed the country's energy bill was soaring as it paid $656 per tonne in May for Venezuela's Santa Barbara crude, compared with an average price of only $394 for Russian oil between January and May.

Despite the large premium attached, Belarus will increase its imports of Venezuelan crude in July via the Black Sea port in Odessa to 240,000 tonnes from 160,000 tonnes in June, a port source told Reuters.

Industry sources said they thought politics rather than economics were at play in the change of supplies at the refinery.

"No one can really understand how this works (economically). So it would be logical to assume it is being done to annoy Moscow," one trader said.

But traders also said that because buying the expensive Latin American substitute for Russian crude made little economic sense, Belarus could not afford a long run of increased imports.

"Just like any unprofitable venture, I don't think this will last too long," another industry trading source said.

Belarussian Oil Company and the country's customs committee declined to comment on crude pricing, saying Venezuelan imports were more interesting that imports of Urals. The president of Belarus, Alexander Lukashenko, visited Venezuela in March in an effort to secure energy supplies after Russia, the country's main supplier, drastically cut the flow of cheap crude to its ex-Soviet neighbour.

Venezuelan leader Hugo Chavez promised the country would supply Belarus with 80,000 barrels of oil per day from May.

For years both major refineries in Belarus enjoyed an effective subsidy from Moscow by importing cheap Russian crude and selling oil products westward at full price.

From January, Russia began charging full export duty on crude supplied to Belarus that the country then refines for export, leading to a 42 percent drop year-on-year in supplies to Belarussian refiners in January-March.

Lukashenko has repeatedly attacked Moscow for cutting energy subsidies. Relations between the two former allies have soured further after Minsk gave refuge to a former Kyrgyz leader criticised by Moscow and threatened to cut Russian oil and gas transit to Europe in a gas pricing dispute in June.

The International Monetary Fund has estimated Belarus losses from Russia's decision to put an export tax on the imports of 110 million barrels of crude, at $2 billion.

Belarus still can import up to 46 million barrels of Russian oil to meet its domestic need free of any export duties. (Reporting Gleb Gorodyankin, writing by Jessica Bachman, editing by Anthony Barker)


Partners: Social Network