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Saturday, January 20, 2018

The price of Russian gas ran into the Belarusian milk

Russia and Belarus have been unable to come to a constructive decision on gas dispute. The meeting of the Prime Ministers was to no avail – each party firmly stands his ground. Russia wants to repay the debt for gas already delivered almost $ 700 million. Belarus in response to expecting a significant decrease in the cost of energy – almost to the level of domestic prices. Question – what is the argument over? Why no one of the European countries, nothing like this happens? Maybe because our closest political partners and neighbours is confident that Russia must pay for their political loyalty of their resources.

Although many had hoped that the gas dispute between Russia and Belarus will be able to resolve before the meeting of Putin and Lukashenko, which will be held in early April. But alas – did not work.

“Just finished negotiations on gas issue between the governments of the Russian Federation and Belarus. Discussed the parties ‘ positions, again checked the current situation. Unfortunately, I do not agree completely about the settlement of the conflict”, – said the head of Ministry Alexander Novak.

According to the Minister, the Belarusian side is not ready to repay the accumulated debt without providing substantial preferences in price, terms and pricing. Today the accumulated debt is more than $700 million.

“Belarusians explain his position by the fact that we have a single Union state and the prices should be uniform for the inner regions of Russia and Belarus, commented on the arguments of the parties Mikhail Krutikhin, economic analyst, partner of the RusEnergy consulting Agency. – Gazprom believes that Belarus is still an importer, she herself gas not produces and consumes, hence, the prices for it should be at the level of export. Albeit lower than in Western Europe, but certainly not for our regions”.

Indeed, we have with Belarus Union state, but nevertheless the customs duty has not been canceled. And the same number of Belarusian products in Russia are certainly not on domestic prices.

“So our position is this: the price of gas expected to remain the same, while all customs between the two countries will not be solved in the framework of a single Union state.”– continues Krutikhin.

And while customs duty exists, the difference between the price in the domestic market and export is at least 30 % . Therefore, the gas dispute hung in the air.

So the question of gas prices for Belarus political or commercial?

“In Belarus believe that the political. In Russia, Gazprom insists that it is a commercial company and must first be baked on its profits, on the income of its shareholders, and Belarus for him is a foreign country, and therefore the price of gas must be exported,” – says Sergey Pikin, Director of energy development Fund.

Belarus tried to raise the price of transit of oil through the pipeline “Druzhba”. It oil goes in 5 countries: Poland and Germany to the North, South branch – Slovakia, Czech Republic and Hungary. If Belarus will raise the tariff for transit of oil, Russian companies will lose some profits.

Of course, Gazprom is part of the import flow to transfer through the pipeline “Nord stream” – for example, in Germany. Harder to do against Poland, and deliveries for the South direction coming only through Belarus. So other options – except to agree – Russia and Belarus do not.

“This is a strong argument, says Mikhail Krutikhin. – Belarusians say: if you’re not here give, you the business there mess up”.

“The cause of the gas dispute between Russia and Belarus is that each side sees different from what should be the cost of a cubic meter of gas. Russia lays in the price not only the cost of extraction, pumping, fuel delivery and customs duty. While Belarus says that the price must be linked to other components and to be significantly lower. Hence the accumulated debt of almost $ 700 million. At the same time, each party firmly stands on its position and even meeting at the level of Prime Ministers did not give a positive result. There’s only one option – to negotiate at the meeting of the two presidents, which will take place in early April. The dispute lasts more than a year, apparently, the Belarusian side hopes that Putin will take a willful decision and without consideration of the compromise prices just appoint a lower cost,” – says Sergey Pikin.

The price of gas is calculated by a formula, it is calculated in dollars. When the devaluation happened, it happened not only we have them too, the price in terms of Belarusian rubles increased dramatically. Therefore, they would like to reduce the price, so it would be more adequate from the point of view of the Belarusian currency. Each side believes that the contract can be interpreted differently. Belarus believes that the price should be significantly lower than in Europe – 73 $. But Gazprom says that if you add up the production, shipping and other overhead costs, you get 132 $

– Like the gas conflict with Ukraine.

– I would not began to compare with Ukraine. Here we not come to this. We are in partnership, in Alliance, politically connected more than the Square. This is one of the swap cards Lukashenko, who constantly hints that the us is more expensive – the cost of gas or political partnership? Want to create a common market, then let the gas costs for both regions. Each side has its own logic. Russia says why we need to be a perpetual sponsor of their neighbors?


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