Mass Media: Gazprom Cannot Support Belarus Any More

Amid the worsened financial situation Gazprom has to save every penny they can save.

The authorities of Belarus have reduced prices for Russian gas for its enterprises by 15.7%, and notably, since April, that is, retrospectively. Such an incentive looks strange at a time when Minsk lacks a desire to pay for the Russian gas which had already been received. At the same time, the Energy ministers of the two states failed to resolve the price conflict, and this dispute has already reached to the level of Vice Premiers. So far Moscow states that it does not plan to intervene in the “Gazprom’s business issue.” But it is highly possible that soon Vladimir Putin and Aliaksandr Lukashenka would have to resolve the gas problem soon, Nezavisimaya Gazeta writes.

The highest ceiling price for natural gas for legal entities and sole traders, who consume more than 0.5 billion cubic metres annually, has been reduced by 15.7%. According to the Economy Ministry resolution, instead of 3.88 million Belarusian rubles per one thousand cubic metres, now they are to pay only 3.27 million (it’s about 10.8 thousand rubles at the current exchange rate of the Central Bank of Russia).

However, on May 3 it transpired that Russian gas giant Gazprom’s daughter company, Gazprom Transgaz Belarus, turned to the Commercial Court of Belarus with a demand to recover debts of country’s gas supply enterprises. And on May 12 the head of the Energy Ministry of Russia Alexander Novak stated that the debt of Belarus to Gazprom is more than $125 million over the first four months of 2016.

However, Belarusian officials have a different point of view. The Minister of Energy of Belarus Uladzimir Patupchyk has informed that Minsk has no indebtedness to the Russian holding for the delivered gas. “We believe that since January 1, 2015 market equal-netback prices should be used,” – Patupchyk explained.

Russia insists on performing the contract in force, while Belarusians believe that after the Eurasian Economic Union (EEU) came into force since January 1, 2015, they should receive gas at prices which are close to Russian domestic ones. It is true that there is an agreement in the EEU that a common electricity and energy market should be formed, however Belarus declared a special position on this issue, and proceeds from the fact that there could be no common energy and electricity market without a common gas market.

Since 2008 gas prices for Belarus are calculated every quarter according to special formula, which is based upon fuel oil prices. This formula had been captured in the intergovernmental agreement in 2013. Proceeding from it, the gas cost for Belarus in dollars was decreasing: in early 2014 1,000 cubic metres cost $165, in 2015 - $142. However, Belarusian officials do not want to bear additional expenses because of the growth of dollar exchange rate to the Russian ruble, and use the old exchange rate of 32 rubles to dollar in their calculations. “Gas for Belarus should cost per 1,000 cubic metres,” – the Prime Minister of Belarus Andrei Kabiakou explained.

“The position of Belarus is clear, they want to get into the single price space as soon as possible, – an analyst of Sberbank CIB Valery Nesterov said. – But at present deliveries to an independent state under a contract currently in force, where a discount for a member of the EEU is envisaged, by the way, are meant. While before the crisis Gazprom could allow to support Belarus, now when the financial situation is worsening, the company has to count every ruble. Now it is a highly wrong time for implementation of the political decision that had been adopted in the fat years. Belarus wants to receive maximum from the political union with Russia, and we would have to bear losses because of this friendship.”

A leading expert of the Union of Oil and Gas Producers of Russia Rustam Tankaev is even more categorical. “Lukashenka is putting through different compositions in order to present Belarus in the most favourable light, and Russia – in the worst light, on the contrary. Now is happening the same, when Russia is charges with unreasonably high gas prices, while prices in the domestic market are reduced.”

It is still not clear for how long the contract terms are to survive. In the near future another meeting at the level of Vice Prime Ministers is expected. At the first meeting of Arkady Dvorkoich with Belarus’ Vice Prime Minister Uladzimir Siamashka they failed to reach an agreement. “Russia does not plan to change gas prices to Belarus for the third quarter, it should be determined by the contract in force,” – Russia’s Energy Minister Alexander Novak said to RIA Novosti.

From all appearances, amid the crisis Russia is not ready to support integration processes additionally. Belarus has the lowest rates for the population in the world now, BelTA was said by Uladzimir Patupchyk. Decrease in the domestic gas price undoubtedly accords with the vital interests of the population. But someone has to pay for that.