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Russia resumes oil deliveries to Belarus after new supply deal agreed

Russia cut Belarus oil supplies off for four days after the two sides failed to agree a new supply deal
Russia cut Belarus oil supplies off for four days after the two sides failed to agree a new supply deal

Russia has restarted deliveries of oil to Belarus’ two refineries after suspending them in the first week of January after the two countries failed to agree on a new supply contract, BelTA reported on January 4 citing deputy chairman of the Belneftekhim concern Vladimir Sizov.

Russia resumed pumping oil, a major money earner for the Belarusian budget, after Russia made new concessions on prices, according to reports.

“Today at 05.05 p.m. pumping units have already been switched on and oil is being delivered to [oil refinery] OJSC Naftan. As the route orders are drawn up, the volume will be added and deliveries will also be made for the Mozyr Oil Refinery,” Sizov said.

Oil supplies were cut off for a total of four days immediately after New Year’s Eve. Production at the two refineries was cut to a technical minimum and the sale of petroleum products abroad was  temporarily abandoned.

Minsk and Moscow have been negotiating a new five-year supply deal all year, which expired on December 31. The talks have been particularly fraught as Russia has changed the way oil is taxed as part of the so-called tax manoeuvre that in effect ends energy subsidies for Minsk that are worth billions of dollars a year. Minsk has been holding out for compensation but Moscow has refused.

Supplies of Russian natural gas to Belarus in January - February of this year will be carried at the price of 2019 - $127 per 1,000 cubic meters, press service of the Belarusian Energy Ministry told TASS.

"In accordance with the agreements reached, supplies in January - February will be made at the price of $127 per 1,000 cubic meters," the press service said.

Oil supplies were resumed on the morning of January 4 after talks between the two countries' prime ministers. Belarus says that the initial volumes will be enough to load oil refineries by the end of January. According to the new agreement, Minsk will receive raw materials without having to pay producers the so-called premium bonus of $10 for each tonne of oil.

Previously, Belarus paid this allowance to manufacturers, which cost the budget more than $200mn annually. However, Minsk has now decided to cut the payments in order to reduce losses from Russia’s tax manoeuvre, reports Belarusian broadcaster Current Time.