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Belarus in negotiations to buy oil, oil products from Kazakhstan

28 May 2019 07:17

NUR-SULTAN. KAZINFORM - Belarus is in negotiations with Kazakhstan to discuss prospects of buying not only oil, but also oil products for consequent conversion at Belarusian oil refineries, BelTA learned from Ambassador of Belarus to Kazakhstan Anatoly Nichkasov.

The ambassador noted: "As for our cooperation in trade in hydrocarbons, Belarus has repeatedly glanced at Kazakhstan as a partner for acquisitions. This year the head of state has given the relevant instructions to negotiate the matter with Kazakh producers."

In his words, a situation emerged at the beginning of the year when upgraded Kazakh oil processing enterprises often make excessive amounts of oil products. In turn, Belarus has the capacity to make high-quality oil products. "It is not the first experience of cooperation for us. At the same time we are now in negotiations in order to considerably increase the volume of deliveries," Anatoly Nichkasov said.

The ambassador mentioned that instructions had already been given to deliver oil products to Belarus for processing using tolling contracts.

Not only trade in crude oil is under consideration but also sales of derivative oil products. "We are talking not only about oil but a number of oil products our enterprises can refine in order to improve the relevant qualities of the product," the ambassador explained.

Anatoly Nichkasov added that the development of interaction with Kazakhstan in the area of trade in hydrocarbons could help balance the bilateral trade turnover. "Our trade turnover is on the rise, but there is a certain disproportion. Belarus' export represents more than 80% of the trade volume. The governments of Kazakhstan and Belarus are looking for ways to balance the trade turnover. Oil industry products could augment our trade turnover. This is why we will do everything necessary for this element to fittingly become part of our trade turnover," the diplomat stressed.

International practice defines tolling as the conversion of an input product for a fee. Foreign raw materials are imported and ready-made products are exported afterwards.

The proposal to step up negotiations with Kazakhstan on matters of oil deliveries was put forward by Belarus President Aleksandr Lukashenko at a recent meeting with Ambassador Extraordinary and Plenipotentiary of Kazakhstan to Belarus Yermukhamet Yertysbayev. Aleksandr Lukashenko said: "You know that we are now working to diversify the deliveries of crude hydrocarbons. We have several areas of common interest and are holding talks on the delivery of oil to Belarus from other places. This year we will mostly complete the modernization of oil processing enterprises. Therefore, it will be easier for us to purchase oil on global markets. In this regard, we are now holding talks and we would like to step up the talks on the delivery of Kazakhstani oil to Belarus. I think we can solve this issue. It is important for Belarus and Kazakhstan (there are no problems here), and for Russia as far as transit is concerned. Russia is a member of the Eurasian Economic Union. I think we will be able to agree on some oil deliveries from Kazakhstan with a country which is close for us."

In turn, Yermukhamet Yertysbayev confirmed Kazakhstan is ready to supply oil to Belarus. He said: "We are ready, there are absolutely no problems. We have sufficient amounts of oil and oil products to offer."

Russia is supposed to endorse the Belarus-Kazakhstan arrangements because oil will have to be transported via an oil pipeline located in Russian territory. "Certainly, it will not be profitable for Russians since they have ample supplies of their own oil on offer. But we would like the Eurasian Economic Union to be advantageous for all participants. It is very important to support each other as our union is being established. Aleksandr Grigoryevich [Lukashenko] didn't just agree with that. He presented a number of other strong and important arguments to support this statement," the diplomat pointed out.

Yermukhamet Yertysbayev added that Kazakh oil can also be delivered to Belarus by rail, but the effectiveness of this kind of cooperation will be much lower. "It is a matter of negotiations between the sectoral agencies of Russia, Belarus, and Kazakhstan. We are ready for it. We have already thought out the entire scheme," he stressed.

In 2018 Belarus-Kazakhstan trade was close to $900 million, 30% up from 2017. Belarus' export exceeded $783 million. In Q1 2019 the bilateral trade fell by roughly 10% from the same period of 2018. The trade turnover made up $171.5 million, with Belarus' trade surplus at $121.7 million.

Belarus exports milk and dairy products, tractors and tractor units, furniture, trucks, medications, frozen beef, sugar, and meat products to Kazakhstan. Major Belarus' imports are oil products, coal, rails, rolled steel products, petroleum gases, flax seeds, cotton fibers, onion, and garlic.

Belarus' commodity distribution network in Kazakhstan includes over 40 companies with a share of Belarusian capital and more than 170 dealer network facilities. There are eight joint assembly plants for Belarusian machinery and equipment. There are 256 organizations with Belarus' participation in Kazakhstan and 45 enterprises with Kazakhstani capital in Belarus, Kazinform refers to BelTA.