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Friday, October 28, 2016

Breaking the agreement between Russia and Ukraine on the pipelines was a signal to Kiev

On the proposal of the Ministry of foreign Affairs and the Ministry of energy the government broke the agreement with Ukraine on the operation of two oil product pipelines Samara—West and Grozny—Armavir—Labour, which was concluded in 1995. As stated in the press release of the Cabinet of Ministers, the Treaty had no more sense, since in February 2016, the Russian sections of both branches belonging to “Transneft”, were sold to the Swiss company’s International Trading Partners AG.

photo: Gennady Cherkasov

According to experts, the pipeline could be sold for about 200-300 million dollars. It is noted that their capacity was 1.7 million tonnes of petroleum products a year, but in 2014 “Transneft” reported that in 5 years from pipes stole 57 900 tons in the amount of approximately $ 62.7 million. In addition, in 2014 “Bashneft” has lost on these sites about 2 billion rubles.

From September 2015, the Russian company had to obtain special permission from the Federal service for technical and export control (FSTEC) for the supply of diesel fuel to Ukraine. Licensing immediately impact on trade: in 2015, Russia sold Ukraine fuel, totaling about $ 1 billion, which is 67% less than the previous year. As for the fighting in the Donbas and the economic crisis in Ukraine rose almost all the refineries, reduction in fuel supplies could become a heavy blow to the country’s economy, but to help Kiev came to Minsk.

For the first half of 2016 Belarus has put Kiev, 2.2 tons of fuel, which is 64% higher than in 2015. The Minsk earned 823,4 million dollars. As a result, in April 2016, the then Prime Minister Arseniy Yatsenyuk urged to completely abandon Russian petroleum products, but the government did not support it, perhaps because Belarus gets its oil from Russia.

But the Russian company did not lose hope to return to Ukraine, because Russia produces about 76 million of diesel fuel, of which the spends a little more than 31 million tons. At the end of spring 2016 FSTEC allowed Transneft to resume the supply. For now the Swiss pipeline company in may was going to pass Kiev 30 thousand tons of diesel fuel, and then 100 thousand tons every month. But in September of Transneft lost my license.

“MK” has found out from experts, what does this mean breaking the agreement and how much he will hit Russia and Ukraine.

Mikhail KRUTIKHIN, partner RusEnegry:

— For Ukraine, the consequences will be minimal, and Russia did not feel it. But “Transneft” can put an end to his plans to put on this route diesel fuel to Ukraine, because in this case the decision was dictated by political rather than economic considerations. We witnessed a further deterioration in Russian-Ukrainian relations and Moscow’s desire as much as possible to annoy the neighboring country. But this does not mean that Kiev will now get less of diesel fuel from Russia or does he lose, as in addition to these two pipelines, Ukraine could get it on the rail routes.

Ivan KAPITONOV, associate Professor of international Commerce at the Higher school of corporate management, Ranepa:

— Still to completely stop the supply did not dare, because the Russian oil in Ukraine remain serious assets. Now the government of Russia said its companies that don’t have any illusions and should refuse to cooperate with Kiev, which will not cease to steal petroleum products. Kiev in any case have to look for a supplier and if he can negotiate the price with Minsk, he will satisfy his needs.


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