Problem with Belarus’ gas debt brings to mind 2016-2017 gas conflict – expert
<p> MINSK, Jun 9 - PrimePress. The problem with Belarus’ debt for supplied Russian natural gas brings to mind the gas conflict of 2016-2017, when Minsk unilaterally switched to paying a “fair price”, and its debt to Gazprom reached $700 million, says Igor Yushkov, leading expert at the National Energy Security Fund (Russia). </p> <p> </p> <p> In January 2016, Minsk provoked an oil and gas conflict with Russia, refusing to pay the contract price of $132 per 1,000 cubic meters. Belarus then stated that $100 would be a “fair” price. As a result, by March 2017, its debt under the supply contract reached $726 million. In response, Russia significantly reduced oil supplies to Belarus, imposed administrative restrictions on imports from Belarus and froze loan tranches from the Eurasian Fund for Stabilization and Development (EFSD). The conflict was resolved in March 2017 after Presidents Vladimir Putin and Alexander Lukashenko agreed on new contract gas prices: $141 per 1,000 cubic meters until the end of 2017, $129 in 2018 and $127 in 2019. Belarus completely repaid its debt to Gazprom in April 2017. </p> <p> </p> <p> Although Belarus paid $726 million for gas supplied in 2016-2017 on April 13, the country still has not received $780 million in the promised compensatory interstate loan formally, to refinance the cost of servicing of the external public debt this year (the part owed to Russia). Belarusian Finance Minister Vladimir Amarin thus said on May 30 that coordination procedures for the Russian government loan were “nearing completion.” Putin’s promise to “unfreeze” the EFSD anti-crisis loan program was only fulfilled in part: Belarus received a $300 million tranche in late April, which had been delayed since last autumn. </p> <p> </p> <p> This time, the current situation hardly suggests that such an outcome is possible, Yushkov says. “The presidents have met and disagreed more than once without compromise. Putin has now taken a rather tough stance: cheap energy commodities in exchange for further integration,” he says. </p> <p> </p> <p> According to the expert, Belarus is looking for “a way to lower gas prices.” “The pointing at cheap gas in Europe did not help, so Minsk made an attempt to get a better price by reducing the tariff for gas transportation.” </p> <p> </p> <p> “There is an intergovernmental agreement in the public domain on the contract with Gazprom, which indicates the tariff for pumping gas from Yamal to the Russian-Belarusian border. It is quite high and is calculated in US dollars [Gazprom’s tariff for transporting gas from the Yamalo-Nenets Autonomous District to the Belarusian border is around $3 per 1,000 cubic meters per 100 km, the domestic Russian tariff is around $1]. This makes the price for Belarus relatively high. Under the contract, gas for Belarus should cost about $152 per 1,000 cubic meters now, but a supplemental agreement reduces it to $127. Putin has publicly stated that there will not be unification of gas transportation tariffs yet. Minsk is now trying to find another element in the pricing formula to cite it when trying to achieve a lower price: the calorific value of gas,” says the expert. </p> <p> </p> <p> This means that Minsk makes claims to the quality of the gas it has been receiving for quite a while, or the calorific value of gas have fallen significantly in 2020. Anyway, this question should have been raised much earlier. Otherwise, it looks more like an attempt to bring the price down, rather than a solid point to negotiate,” Yushkov says. </p> <p> </p> <p> As reported, in late May, Gazprom stated its readiness to begin negotiations on gas supplies to Belarus from 2021 onwards upon resolution of the debt issue. The Ministry of Energy of Belarus says there is no such debt, but there is a disagreement between business entities on determining the cost of gas “taking into account its calorific value.” The ministry sent proposals to Gazprom on a revision of the terms of gas supplies in 2020 and the pricing methodology for the period from January 1, 2021. The ministry also wants to view Gazprom Transgaz Belarus’ method applied to determine the calorific value of gas, since the parties have disagreements on this point. </p> <p> </p> <p> Gazprom said on June 8 that the gas price for Belarus in 2020 would not be revised, and confirmed its willingness to start negotiations on supplies in 2021, provided that Belarus respects the terms of the contract in force. </p> <p> </p> <p> Belarus’ import of Russian gas totals 20 billion cubic meters per year. Belarus remains the second largest consumer of Russian gas after Germany. In February 2020, Miller and Belarusian Ambassador to Russia Vladimir Semashko approved the pricing procedure for the supply of Russian gas to Belarus in 2020. The price for Belarus remained at $127 per 1,000 cubic meters, which is the same as in 2019. Belarus has been insisting that Russian gas for Minsk should equal Russia’s domestic prices, as provided for by the 2011 agreement on the sale of Beltransgaz gas transmission company to Gazprom. After oil quotations dropped in 2020 and so did gas prices on the European spot markets (to $80 per 1,000 cubic meters), Lukashenko argued that, given the global situation, the Russian gas tariff for Belarus should be at $40-45 per 1,000 cubic meters, including logistics costs. End </p>
2020-06-10
Primepress
MINSK, Jun 9 - PrimePress. The problem with Belarus’ debt for supplied Russian natural gas brings to mind the gas conflict of 2016-2017, when Minsk unilaterally switched to paying a “fair price”, and its debt to Gazprom reached $700 million, says Igor Yushkov, leading expert at the National Energy Security Fund (Russia).
In January 2016, Minsk provoked an oil and gas conflict with Russia, refusing to pay the contract price of $132 per 1,000 cubic meters. Belarus then stated that $100 would be a “fair” price. As a result, by March 2017, its debt under the supply contract reached $726 million. In response, Russia significantly reduced oil supplies to Belarus, imposed administrative restrictions on imports from Belarus and froze loan tranches from the Eurasian Fund for Stabilization and Development (EFSD). The conflict was resolved in March 2017 after Presidents Vladimir Putin and Alexander Lukashenko agreed on new contract gas prices: $141 per 1,000 cubic meters until the end of 2017, $129 in 2018 and $127 in 2019. Belarus completely repaid its debt to Gazprom in April 2017.
Although Belarus paid $726 million for gas supplied in 2016-2017 on April 13, the country still has not received $780 million in the promised compensatory interstate loan formally, to refinance the cost of servicing of the external public debt this year (the part owed to Russia). Belarusian Finance Minister Vladimir Amarin thus said on May 30 that coordination procedures for the Russian government loan were “nearing completion.” Putin’s promise to “unfreeze” the EFSD anti-crisis loan program was only fulfilled in part: Belarus received a $300 million tranche in late April, which had been delayed since last autumn.
This time, the current situation hardly suggests that such an outcome is possible, Yushkov says. “The presidents have met and disagreed more than once without compromise. Putin has now taken a rather tough stance: cheap energy commodities in exchange for further integration,” he says.
According to the expert, Belarus is looking for “a way to lower gas prices.” “The pointing at cheap gas in Europe did not help, so Minsk made an attempt to get a better price by reducing the tariff for gas transportation.”
“There is an intergovernmental agreement in the public domain on the contract with Gazprom, which indicates the tariff for pumping gas from Yamal to the Russian-Belarusian border. It is quite high and is calculated in US dollars [Gazprom’s tariff for transporting gas from the Yamalo-Nenets Autonomous District to the Belarusian border is around $3 per 1,000 cubic meters per 100 km, the domestic Russian tariff is around $1]. This makes the price for Belarus relatively high. Under the contract, gas for Belarus should cost about $152 per 1,000 cubic meters now, but a supplemental agreement reduces it to $127. Putin has publicly stated that there will not be unification of gas transportation tariffs yet. Minsk is now trying to find another element in the pricing formula to cite it when trying to achieve a lower price: the calorific value of gas,” says the expert.
This means that Minsk makes claims to the quality of the gas it has been receiving for quite a while, or the calorific value of gas have fallen significantly in 2020. Anyway, this question should have been raised much earlier. Otherwise, it looks more like an attempt to bring the price down, rather than a solid point to negotiate,” Yushkov says.
As reported, in late May, Gazprom stated its readiness to begin negotiations on gas supplies to Belarus from 2021 onwards upon resolution of the debt issue. The Ministry of Energy of Belarus says there is no such debt, but there is a disagreement between business entities on determining the cost of gas “taking into account its calorific value.” The ministry sent proposals to Gazprom on a revision of the terms of gas supplies in 2020 and the pricing methodology for the period from January 1, 2021. The ministry also wants to view Gazprom Transgaz Belarus’ method applied to determine the calorific value of gas, since the parties have disagreements on this point.
Gazprom said on June 8 that the gas price for Belarus in 2020 would not be revised, and confirmed its willingness to start negotiations on supplies in 2021, provided that Belarus respects the terms of the contract in force.
Belarus’ import of Russian gas totals 20 billion cubic meters per year. Belarus remains the second largest consumer of Russian gas after Germany. In February 2020, Miller and Belarusian Ambassador to Russia Vladimir Semashko approved the pricing procedure for the supply of Russian gas to Belarus in 2020. The price for Belarus remained at $127 per 1,000 cubic meters, which is the same as in 2019. Belarus has been insisting that Russian gas for Minsk should equal Russia’s domestic prices, as provided for by the 2011 agreement on the sale of Beltransgaz gas transmission company to Gazprom. After oil quotations dropped in 2020 and so did gas prices on the European spot markets (to $80 per 1,000 cubic meters), Lukashenko argued that, given the global situation, the Russian gas tariff for Belarus should be at $40-45 per 1,000 cubic meters, including logistics costs. End