It is impossible for Belarus to export such high volumes of lubricants when the country itself only produces 200,000 to 250,000 tons of base oil and lubricants, industry expert Oleg Tsvetkov told Lube Report. Tsvetkov is head of the oils department at All-Russian Research Institute of Oil Refining.

Belarus traditionally exports lubes to neighboring Poland and Ukraine, Tsvetkov said. He fears that there must be a murky background behind such illogical numbers because it is impossible for them to consume such big lube volumes produced in Belarus.

Many Russian news outlets have reported that Minsk increasingly exports petrochemical products such as gasoline, diesel fuel and bitumen, and registers them as lubricants, thinners and solvents (the last two are not considered to be petrochemical products), to avoid Russian export duties to the Russian federal treasury. Russia and Belarus 16 years ago agreed to participate in a union of states.

In the first quarter of 2012 Belarus exported 1.39 million tons of thinners and solvents valued at U.S. $1.1 billion, up from 116,000 tons produced in the same period last year, the Belarusian statistical agency reported on its website. Additionally, base oil and lubricants exports in this years first quarter amounted to 593,000 tons (valued at U.S. $363 million) up from 165,000 tons produced in the first quarter of 2011, according to the agency.

Belarus, whose capital is Minsk, has two large refineries: Naftan, a 3,800 barrels per day API Group I base oilrefinery in the north of the country, and Mozyr Oil Refinery in the south. Naftan also operates a joint venture to produce additives with the Russian oil major Lukoil, based at the refinerys site in Novopolotsk. Both refineries are state-run.

The agency did not provide official data on the total base oil and lubricants production in Belarus. The Naftan base oil plant did not respond to Lube Report’s request for comments on its lubricants production.

It is nonsense. They dont produce that much, and Russian refineries dont export that much feedstock to Belarus so they can produce that volume, said Tamara Kandelaki, InfoTEKs general director. She added that the only big base oil and lubricants producer in the country is the Novoplotosk refinery, which produces 200,000 to 250,000 tons of lubes annually.

The Russian Federation should investigate the extreme growth of thinners, solvents and lubricants exports, so that Belarus doesnt avoid paying export duties, Alexandar Surikov, Russian ambassador to Minsk, said recently during a press briefing.

In 2011 the landlocked country spent around $9 billion on crude oil bought from Russia, but earned more than $12 billion in crude oil exports, according to some Belarusian news reports. With the crude oil provided by Russia, Minsk primarily supplied lubricants to European Union countries such as Netherlands, Latvia, Germany and Poland.

The oil trade between Russia and Belarus was liberalized after the two joined the Commonwealth of Independent States formed in 1991following the collapse of the Soviet Union. Because Minsk used its preferred position as Russian crude oil buyer and sold its finished products with lower export duties, the countrys finished products were more competitive on regional markets than Russian products.

In 2009 the Kremlinimposed crude oil export duties on Belarus, and by 2010 Belarusian refineries did not have enough crude oil to process. Belarusian exports dropped and the country lost its main source of export revenues. This became one of the triggers of the economic crises in Belarus last year.

Russian authorities reintroduced liberalized oil trade with Belarus only in 2010, after the latter signed documents on the customs union between Belarus, Russia and Kazakhstan. Following lengthy negotiations with Moscow, Belarus again began importing duty free crude oil from its bigger neighbor.

However, the liberalized crude oil trade with Russia is conditional. Minsk is required to deposit with Russia the revenue obtained from the Belarus export duties for products made of Russian crude and sold to third countries. Belarus has only small reserves of crude oil. It imports most of its crude oil and natural gas from Russia at prices substantially below the world market prices, according to the CIAs World Factbook.