Belarusian Oil Company

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					                                                                                           fOReIgn eCOnOMIC LInkS

                                                                                            Oil Route

                                                                                            to Europe
                              The route has become shorter after Belarusian Oil Company
                                             has opened its subsidiary, BNK (UK) Limited

                                 Marta ASTREIKO, Economy of Belarus Magazine                               After oil prices for Belarus had
                                                                                                       been raised to a European level,
                                                                                                       Belarus’ government took action
                      in 2009 BnK (UK) ltd. exported 74,000 tonnes of oil products worth
                                                                                                       to create Belarusian Oil Company,
                      more than €20 million. in early august 2009 the company completed the            Andrei Dashutin noted.
                      delivery of another consignment of Belarusian oil products to total, one             The closed joint stock com-
                      of the global oil giants. not long ago this world famous company from            pany Belarusian Oil Company
                      france was buying Belarusian-made oil products through middlemen only.           (BNK trademark) was set up in
                      this is just one of the numerous examples attesting to the efficiency of         May 2007 following the example
                      BnK (UK) ltd.                                                                    of Belarusian Potash Company
                                                                                                       to optimize operations of Bela-

                              elarusian Oil Company           near-term period. The same is            rusian oil refiners and to make
                              and its London-based            true about oil products. For the         them more efficient. The staff of
                              subsidiary have already         past six months dozens of oil re-        the company is made up of expe-
                      earned the reputation of reliable       fineries have nearly been put at         rienced specialists of the Belaru-
                      business partners in London,            halt in Europe as crude oil prices       sian oil refining companies and
                      Geneva, and Vienna, Europe’s            have been rising faster than prices      other enterprises. BNK share-
                      financial and trading capitals,         for oil products, making oil refin-      holders include Belarus’ two oil
                      says Andrei Dashutin, BNK (UK)          ing a loss-making enterprise.            refining companies, Belorusneft
                      Ltd. Director.
                          ‘Opening the subsidiary in
                      the British capital has helped, in
                      a relatively short period of time
                      and with active assistance of
                                                                                                                    eDITORS’ nOTe
                      Belarus’ diplomatic missions in
                      London and Geneva, expand busi-
                      ness partnerships with European
                      banks and the world’s biggest oil
                      companies who had not cooper-
                      ated with Belarus before,’ Andrei
                      Dashutin says.
                          According to him, contrary to a
                      widespread belief, trade in oil prod-
                      ucts is not an easy business with                                          andrei daShUtin,
                      guaranteed mega profits. “The                                              director, BnK (UK) ltd.
                      times when a few businessmen                   EDUCATION: Belarusian State University, Joint Vienna Institute
                      had access to cheap or subsidized          (Austria), Korea Development Institute; macroeconomic management
                      crude oil, which they would later          training course at the International Monetary Fund and World Bank in
                      sell at speculative prices, are long       Washington.
                      gone. Today this business is under             CAREER: held senior positions at structural divisions of the Ministry
                      tough government control around            of Foreign Affairs, Agriculture and Food, and the Council of Ministers
                      the world, and profits are regulated       Office where he supervised international economic cooperation, foreign
                      through customs tariffs and excis-         investment and interaction with international finance organisations.
                      es,” says Andrei Dashutin.                     In 2004-2007 worked as a trade counselor at Belarus’ Embassy in
                          Belarus has long been buying           Great Britain and was in charge of the interaction between Belarus and the
                      oil at global market prices which          European Bank for Reconstruction and Development at the same time.
                      are hard to predict even for the               Joined Belarusian Oil Company in October 2007.
Production Association and Bela-
rusian Oil Trading House.

                                                                                                                                  ECONOMY OF BELARUS
    When imported for the pur-
poses of processing, oil comes to
Belarus at world prices, unlike
potash fertilizers. Profitability of
the whole chain – from the pur-
chasing of crude oil, to refining,
to export – depends not only on in-
ternational market trends but on
a whole range of subjective and
objective factors which require
thorough analysis and considera-
    BNK (UK) Limited was reg-
istered in London and opened in
November 2008 to promote Belaru-
sian oil products to the European
market and raise funds to finance
and expand exports.
    ‘Setting up BNK (UK) Ltd. has
been one of the milestones in the
history of Belarusian Oil Com-
                                                                                                                          A new deposit of
pany. This move has made the                                                                                              light oil has been
export of Belarus’ oil products                                                                                           discovered in the
more profitable. Unlike most oth-                                                                                         south of Belarus,
                                                                                                                          in the Khoiniki
er European countries, Belarus                                                                                            region, where
does not have big oil reserves. Yet,                                                                                      oil is extracted
                                                                                                                          from the depth of
Belarus has two large oil refining                                                                                        4,300 metres
companies who can refine up to
20 million tonnes of crude oil per        oil products are being priced us-         also managed to monopolize the
annum, which is much more than            ing a formula that is transparent         transport infrastructure that is
the country needs,’ Andrei Dashu-         and clear for all European con-           used to deliver Belarusian-made
tin says.                                 sumers. The formula is pegged to          oil products through the Baltic
    BNK (UK) Ltd. will be working         the PLATTS quotations. This is            seaports thus securing a compet-
on exploring new markets for Be-          a well-established international          itive edge over other European
larusian oil products in Europe           practice that excludes a subjec-          buyers, Andrei Dashutin goes on
by employing effective instru-            tive approach to the formation of         to say.
ments of lending and risk in-             prices for BNK exports.                       E-trade has always been an ob-
surance and using new delivery                ‘At first we traded our oil prod-     jective indicator of the demand
schemes including arrangement             ucts via a special electronic plat-       for Belarusian-made oil products.
for the carriage of goods by sea          form, selling them to the highest             According to Andrei Dashu-
to a port of destination on CIF           bidder. But it soon became obvi-          tin, the setting up of Belarusian
terms.                                    ous that some international oil           Oil Company and its subsidiaries
    With the arrival of Belarusian        trading companies established             abroad (more subsidiaries will
Oil Company, Belarusian-made              some kind of monopoly. They               be created in Poland and Ukraine
                                                                                    soon) does not mean that export
                                                                                    of Belarusian oil products has
                                                                                    automatically become more effi-
                                               InVeSTMenT PROJeCT                   cient and profitable.
                                                                                        “Hard work lies ahead. We are
                                                                                    planning to start using advanced
    Setting up an assembly facility of Belarus 2103 caterpillar                     financial instruments in trade
    tractors and their modifications                                                in oil products, to get registered
                                                                                    at the London Oil Exchange and
    Total cost of the project – $57.4 million.                                      create efficient logistics to deli-
    Project is initiated by Minsk Tractor Works: 29 Dolgobrodskaya Street, Minsk,   ver oil products to Baltic seaports
    220009, Republic of Belarus.                                                    and other Belarus’ neighboring
    Phone: +375 17 2306842, fax: +375 17 2302111.                                   countries,” Andrei Dashutin con-
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and launch their export.