16 Dec 2010 16:37

Duty-free oil exports to Belarus mean $5.3 bln in lost revenue for Russia - Putin

MOSCOW. Dec 16 (Interfax) - Duty-free oil exports to Belarus in 2011 will mean $5.3 billion in lost revenue for Russia, Prime Minister Vladimir Putin said during a televised Q&A session on Thursday.

"We are delivering 20 million-21 million tonnes of oil to Belarus duty free next year. That will cost our budget, we will have lost revenue of roughly $5.3 billion," he said.

A portion of the loss will be offset by duties on Belarusian exports of oil products made from Russian crude oil.

"We agreed that Belarus would pay us 100% of the revenue from duties on export of oil products made from our crude. Belarusian refineries operate almost exclusively on our oil. If that [revenue] amounts to roughly $3 billion, then our net lost revenue amounts to $2.3 billion," Putin said.

However, that partial offset will be erased by the shift to duty-free gas exports to Belarus. "We will deliver gas to Belarus duty-free. That means our budget will lose another $3 billion in revenue," he said.

In addition, Belarus will not pay export duty revenue to Russia for export of oil product made from Belarus' domestic production.

"We agreed to exclude 1.7 million tonnes in Belarusian oil production from consideration. We won't receive anything for that. That may seem equitable. But that's only at first glance, because the export duty on crude oil is several times greater than the export duties on oil product. It's clear that all the crude oil they produce will be exported, generating revenue for the budget, and they will use our oil to meet domestic demand," Putin said.

"We are doing it this way deliberately, in order to support the Belarusian economy," Putin said.