28 March 2024, Thursday, 12:28
Support
the website
Sim Sim,
Charter 97!
Categories

Russia Again Asks Lukashenka to Sell Assets

67
Russia Again Asks Lukashenka to Sell Assets
Photo by RIA NOVOSTI

Belarus is ready to pay off debts to Gazprom, although it does not resolve problems.

Cut off in Russian oil supplies to Belarus as a measure in response to Minsk decrease in payments for gas has turned to be really effective: according to Kommersant, the two governments have made decisive progress towards an agreement.

Now it is being negotiated that as soon as Minsk pay off debt of $270 million for gas, oil supplies will come to a norm. At the same time Belarus, according to the source, insists on lower gas prices by about a quarter and even more for its power stations.

Russia is open to talks, but it counters with a proposal - to revive the idea of joint projects of SP MAZ with KAMAZ, Grodno Azot with Evrokhim and others.

According to the editorial, on Monday Deputy Prime Minister Arkady Dvorkovich met with First Deputy Prime Minister of Belarus Vasil Matsyusheuski. A preliminary agreement on settlement of the dispute has been reached at the meeting, sources familiar to the situation inform. Minsk agreed to redeem debt for gas in the near future, and then Moscow is ready to resume supply of oil in the same volume.

The parties can change the intergovernmental agreement of 2011 on gas deliveries to Belarus in such a way as to remove the mention of changeover to equal-netback pricing. This thesis has been still the main argument of Minsk: the international legal agreement states that in 2015 Russia could take equal-netback pricing in the domestic market (then a more rapid growth of domestic tariffs was planned in the Russian Federation). Supply to Belarus will be based on the same principle.

In reality, it has not occurred, but this provision was taken by Minsk as obligatory for Moscow and insisted that the gas price for Belarus was based on the principle of "the export price to Europe minus transportation" (according to calculations of Minsk, the price should equal to $73 per 1 thousand cubic meters). Now the price for Belarus is $132 for 1 thousand cubic meters and is grounded on domestic prices: price in the Yamalo-Nenets Autonomous District ($36) plus the cost of transportation to Belarus (about $90) and the cost of gas storage in the Russian UGS ($6).

Thus, in the issue of debt for gas Belarus can meet needs of Moscow. Moreover, the parties agreed that return deliveries of Belarusian oil products to Russia which Minsk was subject to because of duty-free Russian oil supplies must be carried out irrespective of whether such supplies were profitable or not for Belarus at that moment. Now the intergovernmental agreement of 2007 has a point which entitles Minsk to reduction or cessation of petroleum products deliveries to Russia, if other export destinations are more profitable. Therefore, Belarus petroleum products have recently appeared in the Russian market mainly in periods of high prices. Now this point of the agreement can be abolished.

But, according to Kommersant's sources, it will not result in significant losses on the part of Belarus. Now the Russian market is satisfied with local production and in 2017 it may happen that Belarus' deliveries will be minimum or even equal to zero. This year the balance implies import of 1 million tons of gasoline from Belarus, but in first six months only 78 thousand tons were delivered.

At first glance, such conditions look like a complete capitulation of Minsk. But the reduction of duty-free oil supplies by 37% which Belarus faced for failure to pay for Russian gas could result in heavier losses. At the current export duty this reduction can allow Russian budget save (for the Belarusian budget and state-owned companies it means losses) about $200 million in the third quarter only. Thus, Minsk suffers more losses due to the reduction of oil supplies than gains due to lower payments for gas.

In addition, Belarus is likely to agree upon lower gas prices.

Now the Belarusian side insists on the following formula - transportation $65.5 for 1 thousand of cubic meter without taking into account expenses of Gazprom for gas sales and storage in UGS. In this case, according to Kommersant, the Russian gas could fall in price by about a quarter - to $100 per 1 thousand cubic meters. The Russian side is ready to consider the offer, sources say, but only if Minsk meets upon the issue of joint ventures - MAZ and KAMAZ, Grodno Azot and Evrokhim and others.

Kommersant's interlocutors stress that the final agreement has not yet been reached, although it should be approved at the highest level in the near future. The Energy Ministry of Russia did not comment on it, a spokesman Arkady Dvorkovich says that talks proceed. The press-service of the Belarusian government answered the same.

But the issue of gas prices is closely connected with an establishment of a single market of the EEU which is planned to be set by 2019. It implies the idea of a common market based on principles of the Russian market, it will require the energy reform in Belarus, access of a local generations to the Russian wholesale energy market and to competitive energy selection and so on. But the higher cost of gas for Belarus TPPs could undermine their competitiveness in comparison with Russian.

Sources say that the Belarusian side offers to supply Russian gas to Belarus generation at a single price, lower than for other consumers, since 2017. In future Minsk expects that gas price for generation gradually decreases, coming up to the regulated price in the Russian border regions. To compare: the gas price in the Smolensk region is $72 per 1thousand cubic meters.

These arrangements are of a preliminary nature and it's quite possible they will not be approved, Vitaly Kryukov, Small Letters, notes. "The bargain is taken both at political and commercial level: it is obvious that issues of creation of numerous Belarusian-Russian joint ventures can hardly relate to the gas issue", he says.

The analyst recalls that the Belarusian authorities have always been reluctant to discuss joint ventures with Russian companies and over evaluated their assets. "It is still not clear whether willingness to discuss joint ventures again is the concession, the main issue is the price of assets," Vitaly Kryukov says.

According to him, even if Minsk redeems the current debt for gas, in general, the problem will not be resolved and will proceed.

Write your comment 67

Follow Charter97.org social media accounts