Belarus’s plan to import Iranian and Azerbaijani oil: how serious is Minsk?
Belarus Council of the Republic Speaker M. Myasnikovich and Iranian Parliament Speaker A. Larijani, Tehran, 6 February 2017. Image: IRNA
On 3 April, Belarusian president Alexander Lukashenka succeeded in securing concessions from Vladimir Putin following a year-long oil and gas dispute between the two countries. In order to reach a deal, Minsk put the idea of buying oil from non-Russian sources back on the table.
On 15 February, the news source Reuters reported an oil deal between Belarus and Iran. It involved 80,000 tones of Iranian oil which were indeed delivered on 24 March to the Ukrainian port of Odessa for subsequent transport to Belarus.
Over the past decade, Minsk has already gained more experience than its neighbours in securing alternative oil sources; it has been able to secure both Venezuelan and Azerbaijani oil before. Although the deals were short-lived, the Kremlin's reaction to these manoeuvres proves that it takes the Belarusian government's efforts seriously.
Oil from non-Russian sources: Has Minsk reported only a fraction of its imports?
Both Belarus and Iran released minimal information regarding their February oil deal. All publications made reference to Reuters, adding only cursory commentary. Even the National Iranian Oil Company (NIOC), the seller of the oil, based its press release on the Reuters report.
This is in line with the policy of the Belarusian government to shun publicity in its efforts at diversification. According to Reuters, in 2016 Belarus imported a total of 560,000 tones of Azerbaijani oil, but these deliveries stopped in January 2017. Only a handful of these deliveries – just 84,000 tones – were reported in the media before Reuters published its report on 15 February.
Poland's shadow
Remarkably, it was Beloil Polska, the Polish subsidiary of the Belarusian Oil Company Belarusneft, which closed the deal on the Belarusian side. On 20 February, Polish security and energy expert Piotr Maciążek wrote a piece for the well-informed Energetyka24 web outlet suggesting that Belarus was buying Iranian oil with Polish assistance.
He argued that Belarus's deal with Iran on oil delivery could have been linked to another deal regarding Iranian oil supplies to Poland. To conclude its agreement agreement with Tehran, Minsk may even have used the direct support of Warsaw, which is rapidly developing relations with Iran. The fact that the very same NIOC press release about the oil deal with Belarus made reference to an Iranian oil delivery to Poland supports this hypothesis.
There are good reasons to believe that Minsk's move to buy Iranian oil is politically motived by the need to counter Russian pressure. After all, Minsk reportedly purchased only 80,000 tones from Iran, and the deal was completed as a spot transaction; it involved no longer-term commitments.
Most commentators also believe that this oil is to be transported by rail; if Minsk planned to import larger volumes of Iranian oil on a more regular basis, it would make more sense to use Ukrainian pipelines.
However, two facts indicate that Belarus most likely plans to import oil via Ukrainian pipelines in the future. In November 2016, Ukrainian minister for regional development Hennadi Zubko reported that Ukraine would possibly be transporting Azerbaijani and Iranian oil to Belarusian refineries. Moreover, on 21 March, the Ukrainian pipeline operator Ukrtransnafta announced the re-opening of an oil pipeline between Belarus and Ukraine.
Belarus's former plan to import a third of its oil from non-Russian sources
By buying oil from Iran and Azerbaijan, Minsk is reacting to the Kremlin's attempts to impose its own terms of economic cooperation and integration on Belarus. After the beginning of the latest gas dispute between Minsk and Moscow, in 2016 the Kremlin reduced its oil exports to Belarus from the formerly agreed 24m tones to 18m tones.
Oil refinement and sales of reprocessed oil products constitute a major source of income for the Belarusian government, so the reduction of supplies dealt a blow to the financial situation in Minsk.
On 3 April, Belarusian Economy Minister Uladzimir Zinouski directly linked the contraction of the Belarusian GDP in January-March to the reduction of Russian oil imports. Belarusian refineries received less oil, and thus produced less oil products for export.
This, however, is not a new problem for the Belarusian leadership. In 2010, Minsk faced similar problems securing enough Russian oil on favourable terms, so Lukashenka made an oil deal with Venezuela. Belarus, however, is a landlocked country dependent on its neighbours – primarily the Baltic states and Ukraine – for access to the sea, by which the oil must be transported.
In July 2010, the Belarusian government signed an agreement with Ukraine on use of the Odessa-Brody pipeline to transport oil from the Ukrainian Black Sea port of Odessa to Belarus. Minsk guaranteed it would pump through Ukrainian pipelines at least 4m tones yearly in 2011-2012, and even hinted at the possible extension of the agreement after 2012, with the oil volume increasing to 8m tones.
At the same time, Minsk was negotiating with the Lithuanian port of Klaipeda over the possible transport of 2m tones of non-Russian oil yearly on a long-term basis. There were similar negotiations with Latvia and Estonia. Oil deliveries also took place via the three Baltic states subsequently.
As long as Belarus planned on buying Venezuelan oil, schemes involving millions of tones seemed fanciful. Very soon, however, Lukashenka managed to convince Azerbaijan to join the Belarusian-Venezuelan oil deal through swap contracts. Thus, in place of direct deliveries from Venezuela, since 2011 Belarus has been receiving Azerbaijani oil.
Under these circumstances, receiving 4m tones a year seemed like less of a fantastic target, although in total Minsk received only one million tones via the Ukrainian pipeline in 2011– about five per cent of what it needed.
How Lukashenka prevailed over the Kremlin
Naturally, Moscow was irked by Minsk's plans, which were becoming reality. In the end, however, the Kremlin's hands were tied and it eventually gave in: by the end of 2011, Minsk had succeeded in getting Russian companies to sign oil agreements more or less on the terms the Belarusian government had wished. Belarus then stopped importing non-Russian oil until 2016.
This history certainly raises questions about the seriousness of Minsk's intentions to diversify its energy sources. This is as true now as it was in the early 2010s. Nevertheless, the scale of the commitments and risks the Belarusian government was prepared to take vis-a-vis Moscow and Kyiv in 2011 in order to import non-Russian oil proves that Minsk is ready and willing to diversify should Russia prove intractable.
At present, Minsk's moves towards diversifying its energy sources seem more modest. But they could turn out to be larger than currently thought: some deliveries could remain unreported, as the post factum revealed data about the volumes of 2016 imports of Azerbaijani oil prove. Last but not least, in either scenario Moscow has capitulated: the Kremlin seems to be taking Minsk's diversification efforts seriously.
Freedom Day protests, human rights violations, Iranian oil imports – world press digest
Photo: tvpress.ir
Over the past few weeks, the world media largely focused on the protests against the so-called 'social parasite' tax when covering Belarus. The government's reaction, which involved numerous arrests and brutal suppression, alarmed the West and international human rights organisations. They condemned the actions of security services and demanded the release of arrested demonstrators.
The press also took note of the changing dynamics in Belarusian-Russian relations and their implications for the West. The hike in Russian oil and gas prices, as well as the import ban on certain Belarusian agricultural exports, show that Belarus and Russia can no longer maintain the status quo in bilateral relations.
Belarus has begun importing oil from Iran and introduced a limited visa-free travel regime to reduce its economic dependance on Russia. Russia's response to potential political unrest in Belarus remains unpredictable, and is likely to have an effect on Russian-Western relations.
Domestic politics
'Social parasite' protests are brutally suppressed by security forces. BBC, Deutsche Welle, and Reuters covered the 'social parasite' protests, which culminated on March 25th as an unofficial 'Freedom Day' demonstration. The Belarusian authorities toughened their position and violently detained hundreds of people, including journalists and passersby. New York Times reported on protests in regional centres, which went without serious incidents. Meanwhile, Al-Jazeera highlighted the implications of the nationwide nature of the protests, proposing that Lukashenka appears to have lost support in provincial areas.
Human rights organisations report violations of protesters' rights. The Guardian reported on human rights organisations which are calling on the Belarusian government to release arrested writers and journalists. The Committee to Protect Journalists estimated that at least 32 journalists were detained as of 3 March. Security forces detained several famous oppositional figures, such as historian Uladzimir Arloŭ, publisher Miraslaŭ Lazoŭski, and others. Whereas the Western media condemned the suppression of protests, Russia Today questioned the legitimacy of the demonstration, also stressing the fact that March 25, 'Freedom Day', was instituted under German occupation in 1918.
Lukashenka blames Western-backed 'fifth column' for plotting his overthrow. The international media quoted Lukashenka's blaming of a 'fifth column' for organising the protests. Deutsche Welle referred to Belarusian state television, which backed up Lukashenka’s claim by reporting on the discovery of weapons intended for use at the protest. The Russian Vesti news reported that dozens of professional fighters were detained. Lukashenka also claims that camps were established to train fighters in Belarus and Ukraine, with money coming from Lithuania and Poland. While Bloomberg media called such claims paranoia, Russian propaganda source Sputnik went along with Lukashenka’s theory, stating that the US organisation USAID is behind the protests.
International relations
Response from Russia expected should protests continue. In an attempt to predict the development of Russian-Belarusian relations, analysts in several media sources examined the recent Belarusian demonstrations. Bloomberg discussed Lukashenka’s desire for a rapprochement with the EU and mitigated economic dependency on Russia, which, according to the source, is caused by the president's fear of becoming the 'next Crimea'. New Belarusian visa regulations allowing citizens of 80 countries to visit Belarus visa-free for five days irked Moscow, which set up checkpoints on the Belarus-Russia border in response.
The LA Times interpreted Russia’s reaction to the visa decree, the rise in oil prices, and the ban on meat and dairy imports as clear signs of its unwillingness to tolerate Lukashenka's Westward turn. Politico magazine emphasised the West's unpreparedness for a regime change in Belarus, the unpredictability of Russia’s actions, and the possibility of its intervention. At the same time, Bloomberg suggested that Lukashenka’s accusations that Poland and Lithuania where involved in Belarusian protests might indicate a re-orientation in Belarusian politics back to Russia.
Response from Russia to Belarusian political change to shape Russian-Western relations. Forbes discussed the Belarusian protests, suggesting that political change is inevitable and is likely to affect Russian-Western relations. The nature of Belarusian political change, along with Russia’s and the West’s response, is likely to reshape politics in both places. If protests continue, forcing Lukashenka to leave, Russia will have to renegotiate its domination of Belarusian politics with a new government. To prevent the emergence of a pro-European leader, Russia might intervene to retain its position in Belarus.
On the other hand, given Russia's current military involvement in Eastern Ukraine and Syria, intervention in Belarus could come at an unpalatable financial cost. What's more, Russian involvement in Belarusian domestic affairs may lead to the first open confrontation between Putin and Trump, scrapping any chance at better Russian-US relations. Intervention would also worsen Russia-EU relations, which are already strained given the fear of Russian political ambitions in the Baltic countries and other Eastern European states. Nevertheless, if Moscow is not able to secure its interests in Belarus, some kind of action on its behalf can be expected.
Belarus receives first oil cargo from Iran. United Press International and Iranian Press TV reported on the delivery of 600,000 barrels of Iranian oil to Belarus through the port of Odessa in Ukraine, which is slated for processing at the Mazyr oil refinery. For the first time, Bel Oil purchased crude oil from National Iranian Oil Company with a view to find an alternative oil supplier after Russia cut oil exports. According to Press TV, in December 2016 Iran’s Oil Minister had stated that Iran was looking into cooperation with Belarus in manufacturing oil industry equipment and oil trade.
Technology
Lukashenka expresses support for tech industry. Red Herring reported on Lukashenka's support for the IT sector and start-ups during an event organised by successful IT businessman Viktar Prakapeinia. Lukashenka spoke of his commitment to technology, but warned that the IT business should work in a legal and transparent framework. The source quoted Aliaksiej Liavončyk, who insisted that despite improvements in the process of business registration, numerous obstacles remain. For example, it is still necessary to have an informal network of contacts and to pay concessions to certain people to ensure a business’s survival.
