The European Union has banned companies from doing business with Belarusian oil products as a part of wide-ranging economic sanctions on Belarus announced on Thursday, cutting one of the top fuel suppliers in Eastern Europe from the market.
The sanctions, which cut Belarus off from major sources of foreign revenue, including oil products and potash exports, follow the interception of the Ryanair plane flying between Athens and Vilnius on May 23 and the arrest of a dissident journalist and his girlfriend after the plane landed.
From June 25 EU entities are not allowed to import, purchase or transport merely all petroleum products originated, located or exported from Belarus, from motor fuels to specialised products such as petroleum coke, as well as petroleum gas (LPG). Crude oil is excluded from the ban.
The regulation also prohibits providing technical assistance, brokering services, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance for Belarusian oil products.
Belarus has two oil refineries, Mozyr and Naftan, each running at about 180,000-200,000 barrels per day. Some products are kept for domestic use, but more than a half are exported to neighbours Ukraine, Poland, Hungary and other European countries.
The sanctions do not affect contracts for oil products concluded prior to June 25, according to the European Council regulation, which may allow term lifters to continue business with Belarus for some time, traders said.
Significant volumes of Belarus oil products are purchased on spot terms, while the restrictions on financing, transport and insurance will make it difficult to work with Belarus oil products, traders added.
In April the United States announced tougher sanctions on Belarusian entities including the Naftan refinery. Russian companies suspended crude oil supplies to the plant after the ban.
Belarusian state-owned refiner, Belneftekhim, declined to comment.