BTS-2 reached the White House

An oil pipeline construction project has been submitted to the government for consideration.

The process of implementing the BTS-2 pipeline project is moving forward, despite Minsk's attempts to convince Moscow to abandon the construction of an alternative to the existing Druzhba. As you know, last week Belarus offered the Russian Transneft to buy out shares of key state-owned oil transit enterprises.

Deputy Minister of Energy Stanislav Svetlitsky said at the end of last week that his department had submitted a project for the government’s consideration to begin construction of BPS-2. Formalities for its approval should be settled by the end of September. At the same time, experts have no doubt that all permits will be obtained, because the main initiator of the construction of the new pipeline was Vladimir Putin, who now heads the Cabinet of Ministers. Transneft will finance the construction of BPS-2, according to Mr. Svetlitsky. The possibility of using funds from the state Investment Fund, RIA Novosti quotes the official as saying, is “a deep issue and requires elaboration.” The cost of the project a year and a half ago, when it was discussed in earnest, was estimated at 2-2.5 billion dollars. Last week, Transneft Vice President Mikhail Barkov named a more significant figure - 95.14 billion rubles.

BTS-2 is a branch from Druzhba to the port of Primorsk, bypassing Belarus. The idea to neutralize the risks of Russian oil companies by creating an alternative pipeline to Druzhba came to the country’s leadership after, at the very beginning of 2007, President of Belarus Alexander Lukashenko unexpectedly announced an increase in transit duties from $230 per ton by another $45. Transneft “I didn’t agree to the conditions proposed by Minsk, almost in the form of an ultimatum, so pumping through “Friendship” was stopped. Emergency negotiations, which took place in the first week of 2007, led to the signing of an intergovernmental agreement governing the transition to market principles in setting transit rates and duties.

However, as experience shows, no agreement can fully guarantee that Russian oil will reach Europe in any case. The Druzhba pipeline exports about 80 million tons a year, and the Kremlin is thinking about ways to secure oil transit. According to the BPS-2 construction project, the pipeline's capacity will be 50 million tons of oil per year. Despite promises from oil companies to increase production due to tax breaks since 2009, they will not be able to fill the oil pipeline immediately. Therefore, tons will have to be collected from Druzhba.

Belarus purchases about 20 million tons of Russian oil pumped through its territory. From October 1, the export duty rate, which according to last year’s agreements is equal to the Russian one, will be $485.8 per ton. Thus, the republic’s benefit from pumping is estimated at approximately $1.2 billion. With the commissioning of BTS-2, obviously, the budget will miss at least half of this amount. Therefore, the Belarusian leadership is trying to convince Russia to abandon the construction of an alternative to “Friendship”. Last week, the government of Belarus invited Transneft to take part in the corporatization of two republican unitary enterprises - Novopolotsk and Gomeltransneft Druzhba. As the Russian pipeline monopoly stated then, they had not received any requests, but they made it clear that they were not averse to acquiring control over these enterprises. If Transneft really becomes their owner, then a repeat of the situation in 2007, when the valve was closed, will be impossible. But, apparently, the Russian government is not going to abandon BTS-2.

Kirill MELNIKOV