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Russian oil exporters may suspend supplies to Belarusian largest refinery Naftan already in May due to US sanctions

April 28/2021

MOSCOW (MRC) -- Russian oil firms might stop supplying Belarusian Naftan refinery after the United States tightened sanctions on Belarus over alleged human rights violations and abuses, four sources familiar with the matter told Reuters.

Washington last week revoked authorisations for certain US transactions with nine sanctioned Belarusian state-owned enterprises, including Naftan and its owner Belneftekhim.

While not directly affected by the move, Russian companies are concerned they could be penalised if they continue dealing with the Belarusian businesses. Apart from loans, Russia supports its neighbour and fellow former member of the Soviet Union with oil supplies on beneficial terms. But that may change after the recent US order, the sources said, speaking anonymously due to the sensitivity of the matter.

Russias Rosneft and Surgutneftegaz do not plan to supply oil to Naftan in May, two of the sources said. Naftan is one of Belaruss two refineries and has a processing capacity of around 200,000 barrels per day. Russias Tatneft, Russneft and Neftisa also supply oil to Naftan.

We are waiting for our bosses decision, not signing off (orders) for now, one Russian oil company source said.

Russia supplies Naftan with 5.5 million barrels of oil per month and the four sources said they now expected the volumes to be redirected to sea ports for export.

Rosneft, Surgutneftegaz, Tatneft, Russneft and Neftisa did not immediately reply to Reuters requests for comment. Belneftekhim declined to comment.

As MRC informed previously, in 2015, the US Treasury Department suspended sanctions against nine Belarusian companies and issued a license to cooperate with them, which was renewed annually.

Earlier it was also reported that at the beginning of 2020, the state concern Belneftekhim approved a strategy for the development of the petrochemical complex for the period until 2030. Among the priority projects is the construction of a new pyrolysis unit at Polymir. The corporate publication of the concern noted that "an ethylene-propylene unit will be built at the Polymir plant, this will allow to fully provide the existing production with raw materials." The capacity of pyrolysis, as well as the timing of its construction, are not given. The development plan of the petrochemical complex of the Republic of Bashkortostan also includes a project for the production of ABS plastics, which is planned to be implemented on the basis of the Naftan oil refinery. In addition, it is planned to launch polycarbonate production capacity at the refinery.

According to ICIS-MRC Price report, Polymir intends to shut some of its production capacities (158 grade PE) for a one-month scheduled turnaround already next month. The second part of the production capacities will be loaded at 100%. The plant's total annual capacity is 130,000 tonnes. Local converters became more active last week and were trying to replenish their inventories with domestic polyethylene as much as possible. At the same time, it was quite problematic to do this, as Polymir has reduced its low density polyethylene (LDPE) shipments to the domestic market since March, 2021. 

OJSC "Naftan" is one of the largest oil refineries in the countries of Central and Eastern Europe. Commissioned in 1963, the enterprise was incorporated in 2002. The state share in OJSC "Naftan" is 99.83%, the rest of the shares belong to the individual employees of the enterprise. In 2008, a large petrochemical enterprise Polymir was included in Naftan. Naftan produces more than 70 types of products, including various types of fuel, lubricating oils and bitumen, aromatic hydrocarbons and petrochemical products. The company exports 70% of its products, mainly to the CIS countries and the European Union.
Author:Margaret Volkova
Tags:PC, PE, ABS, crude and gaz condensate, LDPE, petrochemistry, Belneftehim, Naftan, Rosneft, Tatneft, Polymir, Belarus, Russia, USA.
Category:General News
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