BELARUS NEWS AND ANALYSIS

DATE:

22/12/2006

Belarus Enforced Payments on Oil Co. of Russia

Belarus will strip Mozyrsky NPZ refinery off $100 million, which is over a half of forecasted net profit. Russia's Slavneft that owns 42.5 percent in the refinery is resolved to challenge the decision. But for Belarus, enforcing such payments on petrochemical enterprises of the country is a solid guarantee against potential losses incurred if Russia starts charging crude export to Belarus.

Yesterday, Mozyrsky NPZ notified Slavneft that it had received a letter from state-run Belneftekhim, ordering to transfer to the National Development Fund of Belarus $100 million, i.e. more than a half of the net profit ($192 million), sources with Russia's oil company said.

In May, the cabinet of Belarus sealed a ruling committing certain highly-efficient enterprises to ensure unconditional transfer of a portion of their net profit to the National Development Fund.

Belarus' Finance Ministry ordered Belneftekhim via a letter of December 19 to pay $387 million to the Fund before December 23, otherwise the money will be collected to the Federal Budget from its enterprises December 26.

In the next move, Belneftekhim claimed money from its divisions, of which Mozyrsky NPZ is the only one that is not wholly controlled by Belarus.

So far, Belarus has been the most obvious winner of the Customs Union Treaty with Russia with the crude of the latter exported absolutely free of duty. For Belarus, exporting the petroleum products refined from that crude accounts for a sizeable portion of budget receipts.

On December 8, however, Russia's Prime Minister Mikhail Fradkov ordered to charge $180.7 per a ton of exported crude. So, the unconditional collection of money from refineries will enable Belarus' President Alexander Lukashenko to protect the country, should he fail to agree with Russia on duties' softening.

Source:

http://www.kommersant.com/p732708/Slavneft_transfer/