Consistency lacking in equal terms on Single Economic Space energy market

The movement towards equal terms and the common market of energy resources of the Single Economic Space of Belarus, Kazakhstan, and Russia should be more consistent. The opinion was voiced by Alexander Yershov, expert of Thomson Reuters Company, at the 6th international conference arranged by Confidence Capital Company with assistance of the Belarusian state petrochemical concern Belneftekhim in Minsk on 8 April to discuss oil processing and the export of Belarusian oil products, BelTA has learned.

“The three countries did not start their integration from ground zero. They have a common past, economic and infrastructural ties. But certain consistency in the advance towards the Single Economic Space is lacking. No doubt it is impossible to change everything in one go, interests of the countries should be kept in mind, but if we are moving towards a union, we shouldn’t move backwards. It is a bit embarrassing for participants of the process,” said Alexander Yershov.

According to the expert, the creation of the Single Economic Space can render considerable influence on the macroeconomy, however, the growth of the influence is deterred by slight inconsistency in the steps taken, in particular, on the market of oil products.

The launch of the Single Economic Space did not do away with quotas on supplies of oil and oil products, which is surprising, the expert said, because it is difficult to speak about equal terms for all the market participants then. “I see a paradox: the countries want a unity and at the same time maximum self-dependence, maximum observance of their interests,” the expert noted. In his words, there are plans to change once again the apparently established rules of the game by 2015. By that time some common rules for the market of oil and oil products can be introduced, but it can be done the Russian way, in other words, taking into account Russian interests as much as possible. “Once again it will reshape the market and create tension,” the expert believes.

According to Alexander Yershov, the use of economic cooperation matters in politics damages the development of the common market of energy resources. In his words, politics-determined decisions on market regulation lead to a turmoil in commodity flows.

As an example the expert of Thomson Reuters Company mentioned the Russian automobile fuel market situation. In 2013 Russia introduced a new technical regulation on gasoline. The expert remarked that the first attempt to do it in 2011 failed because Russian oil refineries were not prepared for the new requirements and the step triggered a crisis of gasoline supplies on the home market. When the technical regulations were enforced in 2013, the Russian oil refineries were once again not ready, but the Russian leadership had negotiated Belarusian gasoline deliveries. As a result, Russian oil processing companies complain about the Belarusians, who have started shipping high-quality light oil products at competitive prices to the Russian market following the agreement on oil delivery terms. The expert believes that the Russian oil refineries did not want to compete economically and instead applied for support to the Russian Energy Ministry to protect not market interests, but in essence their overpriced products.

Sergei Kuyun, an expert from Ukraine, Director of the consulting company A-95, backed the opinion of the inconsistent regulation of the market with administrative leverage. Sergei Kuyun said that outside observers can see that for now the union is not between equals. “When Russia needs them, oil products are delivered. When Russia changes mind, the merchandise has to be taken back,” he remarked.

Alexander Yershov spoke in positive terms about the possibility of arranging Kazakh oil deliveries to Belarus. “The shipments were made earlier and it is quite doable within the framework of the Customs Union. However, this year Russia intends to sell about 22 million tonnes of crude oil to Belarus and is ready to provide as much on its own. But if there is a mutual interest, then Kazakh oil will come in handy, because the Transneft system lacks resources because the new pipelines, which have been built in different directions, have to be filled up”.

Earlier BelTA quoted Mikhail Rusyi, Vice Premier of Belarus and co-chairman of the Belarusian-Kazakh intergovernmental commission, as saying that the delivery of Kazakh oil to Belarusian oil refineries is being considered.