Diesel fuel flows around Belarus.

Transneft is unlikely to be able to effectively use its Belarusian asset Zapad-Transnefteprodukt, despite the fact that, in terms of significance, Minsk has abolished the burdensome environmental tax for this pipeline. According to “b”, Russian oil companies are no longer interested in using this pipe for searching in Latvia, pumping in Hungary the conflict over the Ukrainian part of the pipe, and there are not enough volumes for reverse problems with Belarusian refineries in Russia. Experts believe that if the pipe is mothballed, it is unlikely that it will ever be launched.

As it became known to Kommersant, Transneft may mothball the oil product of UE Zapad-Transnefteprodukt. This pipe, surrounding Uneche to Russia, with its northern branch goes through Belarus to the Latvian port of Ventspils, and the southern branch goes through Belarus and Ukraine to Hungary. The pipeline is historical for the export of Russian diesel fuel, but currently has no load.

For example, Belarus has introduced an environmental tax on the transit of Russian oil and petroleum products since 2020, and then more than tripled the income tax rate from 18% to 50% from 2021. This, coupled with a change in the export flows of Russian oil products, led to the fact that pumping through pipes in 2021 fell by half, to 3.4 million tons per year, which resulted in losses of pipe operators for 800 million rubles. (see Kommersant dated October 14, 2021). According to Kommersant’s interlocutors, as a result, the company stopped accepting applications for pumping, since “it was cheaper not to pump than to pay taxes.” But on the eve of the presidents of Russia and Belarus on February 18, Minsk unexpectedly abolished the environmental tax and returned the income tax to its previous level.

However, Kommersant’s interlocutors say that this will no longer help Zapad-Transnefteprodukt, the value of assets, which was estimated at almost 7 billion rubles last year, remains operational. Russian oil companies have already redirected volumes from Ventspils to other directions and hardly changed their minds, Vladimir Putin’s order redirected cargo from the Baltic States to Russian ports. Demin, an adviser to the president of Transneft, confirmed to Kommersant that Igor had not applied for pumping in this area for 2022, refusing to give more detailed comments.

Deliveries to the adaptation are not yet possible due to a shareholder conflict. In 2016, Transneft sold the Prikarpatzapadtrans system to the Swiss company International Trading Partners, but subsequently Ukraine nationalized the pipe, while the technological volume of diesel fuel in it (about 1.5 million tons) remains private property. As Kommersant’s interlocutors explain, the parties have not been able to agree on the conditions for using the route for several years.

The third oil product of steel use is the reverse pumping of Belarusian metals in accordance with the ports of the Russian Federation in the Baltic (the most realistic option is Primorsk). But, Kommersant’s interlocutors say, it will be a reserve only when pumping more than 5 million tons per year, while the Belarusian side is ready to talk about only 2 million tons.

As Sergei Garamita from Raiffeisenbank said, for the preservation of the product pipeline, an accurate understanding of the lack of demand for this direction is necessary. But in any case, the expert does not expect that simple pipes will have a serious impact on Transneft’s performance as a whole. According to the expert of the Financial University under the Government of the Russian Federation Igor Yushkov, considering that currently up to half of oil products and about 20–30% of diesel fuel in Ukraine are consumed from Belarus, Kiev may be interested in collecting not only for transit to Hungary, but also for searching on the Ukrainian market. However, the delivery may prevent the aggravation of the geopolitical situation, in which Kiev accepts the Lukashenka regime as an import from Moscow.