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Friday, October 21, 2016

Belarus came up with an alternative to Russian gas

Minsk said about the readiness to buy gas in Russia, and in Kazakhstan and Uzbekistan, because that’s where he supposedly cheaper. It is not that other, as an element of bargaining with Gazprom. Belarusians to complain about – Russian gas they get at the lowest price in Europe. But even if the price was higher find another vendor Belarus would be difficult.

Belarus is ready to buy natural gas in Kazakhstan and Uzbekistan. “There he is cheaper, than in Russia. And if there is a single market, bought – and no problems. A monopolist Gazprom then it will only be for the transportation of gas”, – said General Director Leonid Rudinsky Beltopgas.

“It’s just a bargain for the price. Belarus has repeatedly resorted to such tools. You may recall, for example, about the supply of oil from Venezuela”

According to him, now Gazprom produces only about 30-40% of the gas pumped through its gas transportation system. While independent gas producers, in addition to the Russian holding in the CIS enough said Rudinsky.

He also said that the Belarusian company will continue to pay for Russian gas at cost price, which is below contract until the end of the negotiations.

So sharp statements of the head of the Beltopgas are contrary to the morning material “Kommersant” that the governments of the two countries to make substantive progress towards reaching agreements that Belarus has agreed in the near future to repay the debt for gas supplies from Russia. About it writes the edition with reference to sources. To “persuade” Minsk managed by reducing deliveries of Russian oil to Belarus in response to the underpayment of Belarusian companies for gas.

The debt of Belarus for Russian gas by this time has already reached $ 270 million since the beginning of the year, said on the eve of Russian energy Minister Alexander Novak.

The essence of the price dispute is that Minsk considers unfair the current contract price at 132-133 dollars per thousand cubic meters of Russian gas. According to the contract, it is formed so: the price of gas in the Yamalo-Nenets Autonomous Okrug 36 dollars plus 90 dollars for the transportation of gas to Belarus plus six dollars for the storage of gas in the Russian UGS (underground gas storage).

According to the publication, Minsk insists on reducing the cost of transporting gas from 90 to 65.5 per thousand cubic meters and the neutrality of prices for storage in the Russian UGS. That is, Belarus wants to get a discount at 24.5 dollars per thousand cubic meters and to buy gas at $ 108 per thousand cubic meters against $ 133. Meanwhile, earlier Minsk was called a just different the cost of gas.

Gas for Belarus will cost $ 80 per thousand cubic meters, said Prime Minister of Belarus Andrei Kobyakov. Belarusian energy Minister called “fair” price for Russian gas at $ 73 per thousand cubic meters.

The statements of the Beltopgas mean that Minsk continues to actively trade with Russia. “Apparently, the negotiations are not completed, the issue has not been resolved” – I agree Deputy Director of the national energy security Fund Alexei Grivach.

“It’s just a bargain for the price. Belarus has repeatedly resorted to such tools. You may recall, for example, about the supply of oil from Venezuela. This is a common trading process”, – says the Chairman of the Board of Directors of Engineering company “2K” Ivan Andrievsky.

Five years ago, Minsk is also claimed that to buy oil in Venezuela is more profitable than in Russia. And even started to import Venezuelan oil. But soon Belarus was forced to admit his mistake. “The market situation is such that it is cheaper to buy oil in Russia, so we stopped to buy oil in Venezuela” – pointedly said the then Vice-Premier of Belarus Vladimir Semashko.

The arguments of Minsk in the current gas dispute is also extremely weak, and bring down the price at the expense of other suppliers is simply impossible, experts believe.

First, in order to receive gas from Uzbekistan and Kazakhstan, it is necessary first to build the pipeline, says Grivach. Otherwise, the scheme without the participation of Gazprom impossible. Second, the cost of gas in Kazakhstan and Uzbekistan higher than that Belarus pays Gazprom. Belarus is actually already gets the largest discount on the entire Eurasian space. “Russia is ready to bargain, but with all the discounts the price will be not less than $ 100 per thousand cubic meters, a more realistic scenario is 120-130 dollars. While buying gas abroad will cost Minsk at least 60% more expensive with the transportation”, – said Georgy Vashchenko of IR “freedom Finance”.

Thirdly, neither Kazakhstan nor Uzbekistan there is simply no extra gas supplies to Minsk. For comparison: Belarus bought last year in Russia, about 19 billion cubic meters of gas, while Kazakhstan exports of 11-12 billion cubic meters. About the same exported Uzbekistan. But all the gas has long been contracted.

“Part of the export is within the swap supplies – in exchange for imports from other countries. Part goes to China, and the exports definitely will not be redirected to the West. Part of supply is in Western Europe, but no change on Belarus, which is unlikely to be ready to offer a higher price, nobody will,” – said Andrievsky. And to spoil relations with Gazprom because of the Belarusian market of these countries is not interesting, he adds. After all, Gazprom is engaged in the transportation of their export gas and supplying its gas to the East of Kazakhstan.

“The real volume of exports from these countries to Belarus is unlikely to be any significant. And delivery of several thousand cubic meters will not count and may be used only for the loud statements” – sums up Andrievsky.

Theoretically Minsk may try to reach an agreement on gas deliveries with Rosneft or NOVATEK, which might even been interested in such cooperation, reflects Grivach. However, this is a direct violation of the intergovernmental agreements with Russia.

All relations in the gas sector are set out in the intergovernmental agreement. Under this agreement Belarus has sold its gas infrastructure to Gazprom, the cost was $ 5 billion. Intergovernmental agreement and contract are prescribed including the right of Gazprom as an investor in the Belarusian gas sector, how through the implementation of gas in the Belarusian market all these investments should pay off in the long term. And this is including Beltopgaz it makes sense to think,” – says Grivach.

As for the common gas market of the EEU, which has affected Rudinsky, its formation is planned, almost 30 years by 2025. By the time a lot of water can escape.

“132 dollars is the price which has developed a long-term contract, which was signed on the basis of an intergovernmental agreement between Belarus and Russia. Other pricing mechanisms in Belarus,” – says Grivach.

Moreover, the price formula in the contract in previous years were quite happy Minsk, the dispute arose only this year – and not by accident. The reason is the change in market conditions (the rise of the dollar), which led to the fact that the discount for Belarus contract was not as significant as before. “In 2013-2014, Belarus received a discount on this contract in the region of 50% to the price of gas in neighboring States, and now it is 20-30%,” says Grivach.

So, in 2013, the difference between the price of Russian gas for Belarus for Europeans was more striking. Then in Europe, Russian gas cost $ 350 per thousand cubic meters, and Belarus – 160 dollars, the benefit of Minsk was $ 190. Now Europe buys Russian gas at an average of 170-180 dollars per thousand cubic meters, while Minsk – $ 130. The difference was reduced almost five times.

Meanwhile, Minsk is still a sin to complain about the price of Russian gas is still cheaper than Europe. This is the lowest price not only in Europe but also in other CIS countries and even in other countries of the Eurasian Union. In Europe, the average gas price is 170-180 dollars per thousand cubic meters, in the CIS – 140-150 dollars.

The Belarusian “daughter” of Gazprom – “Gazprom transgaz Belarus” – in may, has filed a lawsuit in the arbitration court at the Belarusian chamber of Commerce and industry to the gas supplying organizations in the country about the debt for the gas supplied. Gazprom could easily win this lawsuit. Another thing is that the trial may last so long that the expiration of the contract, said recently the Russian Ambassador to Belarus Alexander Surikov.

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