Belarus and Russia on the verge of another gas war
<p> MINSK, Jun 1 - PrimePress. Actions of the Belarusian authorities, which (presumably unilaterally) stopped making full payment for current supplies of Russian natural gas, put Belarus and Russia on the brink of another gas war. </p> <p> </p> <p> Gazprom CEO Alexei Miller told reporters on May 29 that Belarus was $165.57 million short in payment for gas supplied to the country in 2020. </p> <p> </p> <p> Belarus annually imports about 20 billion cubic metres of gas from Russia and is the largest consumer of Russian gas after Germany. In February 2020, Gazprom CEO Alexei Miller and Belarusian ambassador to Russia Vladimir Semashko signed a document on the gas pricing formula for 2020, keeping the price for Belarus flat on the year at U.S. $127 per 1,000 cubic metres. However, subsequently the price of oil and gas in the global market dropped significantly, and the favourable ‘non-market’ and stable price of $127 for the whole year turned out for Belarus to be an excess payment in comparison with other buyers of Russian gas. Since then, Lukashenko, Rumas and relevant officials have stated the need to reduce the gas price. For instance, Rumas said that Belarus would try to prove to Gazprom at the talks in May 2020 that the price of gas imported from Russia was excessive, as the price for spot deliveries stood at $80 per thousand cubic metres. The talks did not take place in May, which was obviously due to Belarus’ reluctance to pay the debt. </p> <p> </p> <p> On May 29, Gazprom CEO Alexei Miller said he was ready to negotiate the terms of gas supply to Belarus for the period after January 1, 2021, only after the current debt for gas supplies in the amount of $165.57 million has been fully settled. It follows from his words that Gazprom is not even going to discuss the prospects of cutting the gas price for Belarus in 2020. Previously, Russian authorities would also refuse to address this issue, insisting on execution of the contract signed by business entities. </p> <p> </p> <p> Nevertheless, Belarus is trying to achieve a price of Russian gas at two political venues–the Eurasian Economic Union (EEU) and the Belarus-Russia Union State. </p> <p> </p> <p> Given the fact that the transit component accounts for about 70% of the gas price for Belarus, while the tariffs for gas transportation in Russia are three times lower than for gas supplies to Belarus, Minsk insists on the harmonization of tariffs in the Eurasian Economic Union (EEU). However, at the EEU summit on May 19, 2020, Russian President Vladimir Putin rejected the possibility of tariff unification until the creation of a common gas market in the EEU (expected by 2025). In his words, a single tariff can only be implemented in a single market with a single budget and unified taxation system. </p> <p> </p> <p> Losing the negotiations at all levels, the Belarusian authorities have apparently decided to repeat the tactics of 2016-2017, when they unilaterally paid for Russian gas some ‘fair price’, with Belarus' debt to Gazprom reaching $726.2 million. Then the gas price for Belarus was about $132 per 1 thousand cubic metres, but the Belarusian side was paying $108 per 1 thousand cubic metres. </p> <p> </p> <p> The conflict was resolved only in April 2017. The fixed price of gas in 2018 was $129 per thousand cubic metres, while in 2019 - $127. In addition, the Belarusian benefit was that the decision on the gas price was linked to the oil re-export scheme – a possibility for Belarus to annually re-export 6 million tonnes of Russian oil and keep the proceeds from export customs duties. </p> <p> </p> <p> Time will show whether the Belarusian tactics will work this time. It depends on whether Gazprom, which owns the entire gas transportation system of Belarus, will escalate the conflict or give in. </p> <p> </p> <p> It should be taken into account that July 2020 is the officially declared launch date for the first power unit of the Belarusian nuclear power plant, which is being built by Russia mostly at the expense of Russian loans. The launch may not take place, if the gas conflict is not resolved by then. End </p>
2020-06-02
Primepress
Belarus and Russia on the verge of another gas war
MINSK, Jun 1 - PrimePress. Actions of the Belarusian authorities, which (presumably unilaterally) stopped making full payment for current supplies of Russian natural gas, put Belarus and Russia on the brink of another gas war.
Gazprom CEO Alexei Miller told reporters on May 29 that Belarus was $165.57 million short in payment for gas supplied to the country in 2020.
Belarus annually imports about 20 billion cubic metres of gas from Russia and is the largest consumer of Russian gas after Germany. In February 2020, Gazprom CEO Alexei Miller and Belarusian ambassador to Russia Vladimir Semashko signed a document on the gas pricing formula for 2020, keeping the price for Belarus flat on the year at U.S. $127 per 1,000 cubic metres. However, subsequently the price of oil and gas in the global market dropped significantly, and the favourable ‘non-market’ and stable price of $127 for the whole year turned out for Belarus to be an excess payment in comparison with other buyers of Russian gas. Since then, Lukashenko, Rumas and relevant officials have stated the need to reduce the gas price. For instance, Rumas said that Belarus would try to prove to Gazprom at the talks in May 2020 that the price of gas imported from Russia was excessive, as the price for spot deliveries stood at $80 per thousand cubic metres. The talks did not take place in May, which was obviously due to Belarus’ reluctance to pay the debt.
On May 29, Gazprom CEO Alexei Miller said he was ready to negotiate the terms of gas supply to Belarus for the period after January 1, 2021, only after the current debt for gas supplies in the amount of $165.57 million has been fully settled. It follows from his words that Gazprom is not even going to discuss the prospects of cutting the gas price for Belarus in 2020. Previously, Russian authorities would also refuse to address this issue, insisting on execution of the contract signed by business entities.
Nevertheless, Belarus is trying to achieve a price of Russian gas at two political venues–the Eurasian Economic Union (EEU) and the Belarus-Russia Union State.
Given the fact that the transit component accounts for about 70% of the gas price for Belarus, while the tariffs for gas transportation in Russia are three times lower than for gas supplies to Belarus, Minsk insists on the harmonization of tariffs in the Eurasian Economic Union (EEU). However, at the EEU summit on May 19, 2020, Russian President Vladimir Putin rejected the possibility of tariff unification until the creation of a common gas market in the EEU (expected by 2025). In his words, a single tariff can only be implemented in a single market with a single budget and unified taxation system.
Losing the negotiations at all levels, the Belarusian authorities have apparently decided to repeat the tactics of 2016-2017, when they unilaterally paid for Russian gas some ‘fair price’, with Belarus' debt to Gazprom reaching $726.2 million. Then the gas price for Belarus was about $132 per 1 thousand cubic metres, but the Belarusian side was paying $108 per 1 thousand cubic metres.
The conflict was resolved only in April 2017. The fixed price of gas in 2018 was $129 per thousand cubic metres, while in 2019 - $127. In addition, the Belarusian benefit was that the decision on the gas price was linked to the oil re-export scheme – a possibility for Belarus to annually re-export 6 million tonnes of Russian oil and keep the proceeds from export customs duties.
Time will show whether the Belarusian tactics will work this time. It depends on whether Gazprom, which owns the entire gas transportation system of Belarus, will escalate the conflict or give in.
It should be taken into account that July 2020 is the officially declared launch date for the first power unit of the Belarusian nuclear power plant, which is being built by Russia mostly at the expense of Russian loans. The launch may not take place, if the gas conflict is not resolved by then. End