Belarus President says oil refining turning into unprofitable industry

Belarus President says oil refining turning into unprofitable industry

The President has criticized the work of Belarusian oil refining on June 1 at a meeting on the strategy for the development of the industry.

The question is akin to the independence of the state, Alexander Lukashenko is convinced. Two refineries bring the same benefits as one telecommunications company Beltelecom. Oil refining is a strategic industry for Belarus, its share in industry is more than 13%, and about 17% in export. But in 2016, the oil balance went into negative territory.

Alexander Lukashenko, President of Belarus:
Oil refining is turning into an unprofitable industry, which needs to be modernized, while earlier it was a flagship of the economy. I want to remind you that a lot of money has been invested in upgrading and modernizing the refinery, and there is still no due payback. The planned depth of oil refining in 2015 (and it was promised to be more than 90%) has not been achieved. The added value in refining in the gross domestic product in 2016, if accurately calculated, is only 0.5%. This question is akin to the independence of our state. We must do our utmost to ensure the energy independence and security of Belarus.

Among the reasons for the decline in the efficiency of the industry - a significant drop in world oil prices, a fluctuation in demand for hydrocarbons and changes in Russian oil supplies (both in value and volumes). After Moscow's tax maneuver (with a decrease in export duties and increase in extraction taxes) profits from Belarusian refineries have declined markedly.

But there are many internal problems too. The time for modernization was delayed, and the cost of the construction itself increased because of this. The President demands from new top managers a prompt response to new conditions of world competition.

Alexander Lukashenko:
I warned that old schemes won't work, but what you're proposing are old approaches. I also want to warn you. Now some will start to prove that everything is not so bad, and if it's bad, we are not to blame - someone else is to blame and the only right way was failed. Others will begin to argue that there are a lot of flaws. It is natural. Once again I want to emphasize: we have failed many modernization projects. I am not going to tolerate such a situation with modernization. If you start arguing with me here as usual, you will go from here without your briefcases. I warn you: I will not allow the President's decisions to be devalued, disavowed and failed. I cannot allow that.

The head of state criticized other major enterprises of the country too. Alexander Kosinets was entrusted with the task to figure out the reasons for the failure of modernization. He will have to propose ways to minimize the negative consequences. He will supervise these matters as an assistant to the President.