BELARUS NEWS AND ANALYSIS

DATE:

19/09/2006

Russia Strips Belarus of Its Oil Export Duties

Russia's government seeks a larger share of profits from export duties on oil products made at Belarusian refineries from Russian oil. Belarus is reluctant to annually lose up to $2 billion and suggests a bargain - raising rates of oil export duties up to those in Russia and freezing prices on the export of Russian oil via Belarus.

A governmental source reported that Russia would suggest that Belarus consider raising Russia's share to 85 percent at talks of economic officials of the two countries late September.

The duties bring an estimated $2 billion to the Belarusian budget annually, boosting the country's GDP by up to 3 percent every year. The existing practice also helps Russian companies to earn. Local subsidiaries of Russian firms supply oil to Belarusian refineries duty free, only to export oil products with low Belarusian duties to Western Europe. Last year, Belarus imported 19.2 million metric tons of oil from Russian, exporting 13.5 million tons of oil products.

Meanwhile, Belarus has promised to increase its duties up to those in Russia.

Belarus's agreement to give Russia 85 percent of profits on the duties could bring $350 million to the Russian budget every year, and the unification of the duties rates - another $500 million.

Vadim Visloguzov

Source:

http://www.kommersant.com/page.asp?id=705792