Why does Russia redirect Belarusian transit?

The Russian Railways Company has adopted a decision to provide discounts on transit of oil products from Belarus to seaports in the northwest of Russia. The decision stands to reason Moscow’s aspiration to use its port capacities more efficiently and stop cooperation with unreliable transit companies. Experts interviewed by EADaily on October 20 said Russia “kills two birds with one stone” receiving both economic and political benefits. This will make the Russian ports more profitable and expand the freight railway infrastructure of the Russian Railways. As for political benefits, they are obvious: the transit of the union country is redirected from the Baltic ports that are not reliable partners for Russia to its domestic harbors.

“It is not an impulsive decision. This is part of Russia’s traditional strategy of port capacity development for export of the local production and imported cargoes via the territory of Russia. During the recent years, it has become a vital task to get rid of the transit agents who can or already try to link the Russian transit to political claims. The efforts to refuse from the mediation services of Baltic States like of the present-day Ukraine are quite natural and substantiated,” says Vladimir Simindey, the head of research programs of “Historical Memory” Foundation, expert on Belarus.

The expert says Russia pursues its own interests by providing freight transit discounts to Minsk. In particular, Simindey says, the discount will give Russian ports extra capacities and help them stop working with unreliable transit companies that participate in various anti-Russian campaigns.

Sergey Pikin, Director of Energy Development Fund, says the decision to provide discount for Belarusian transit to redirect Belarusian freights to Russian ports fits into Russia’s policy.

“We weigh to increase the load of our ports. Transneft weighs to refuse from oil transit via Baltic States within the coming years,” Pikin says. “This is in favor of Belarus, Russia and Russian Railways as their freight activity increases, which will have an inevitable impact on the company’s incomes.”

Stanislav Mitrakhovich, senior expert at the National Energy Security Fund, says Russia intentionally restricts the use of the Baltic ports for export and import.

“This was predictable, considering the permanently worsening political relations of Russia and the Baltic states, which could not but affect the economic relations as well. Let us remember that Lithuania introduced gas purchase rules for its companies binding them to purchase gas from LNG terminal. All this should have sparked counter-measures by Russia. As a result, Russia has restricted the use of the transit capacities of the Baltic ports,” Mitrakhovich says.

Sofya Katkova, project manager at Morstroytechnology LLC, a design, engineering and consulting company, says redirection of Belarusian cargoes from Baltics is certainly complicated, as for Belarus it is easier to use the deep-water and more accessible Baltic ports. The 25-percent discount introduced by the Russian Railways is not enough, it is necessary to develop the logistics on the example of the Baltic ports. The expert is sure that many issues are yet to be settled; otherwise, the discount will prove inefficient.

Katkova recalls that terminals at the Russian ports are occupied and there is no place for the Belarusian oil products. Besides, she says, the port approaches are not free, as there are port congestions.

It was reported earlier that Russian Railways offer a 25-percent discount for transit of oil products from Belarus to the Russian ports in the northwest. According to Kommersant, the discount will make the railway tariffs comparable to the ones of the Lithuanian ports Ventspils and Klaipeda. Not only Russian ports will gain from the discount, but also the Russian Railways that will have additional income from an increased transit of oil products. Besides, the decision stems from the political relations of Russia and the Baltic States. Earlier, Transneft President Nikolay Tokarev said the company will stop exporting oil products via Ventspils and Riga ports by 2018.