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Lukashenka Left Without Oil

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Lukashenka Left Without Oil

Belarus-Russia dispute takes other circle.

In October Minsk threatened with the tariff rate increase for oil transit, and now it comes to the point again. This time Minsk plans to raise the rate by 20.5% since the beginning of 2017. But it can be done only in agreement with the Transneft and the Government of Russia, and the Russian side points out that the flow volume - the main factor of tariff rate formation - is unknown, Kommersant writes.

Belarus informed Transneft about plans to raise tariffs for the transit of Russian oil through its territory by 20.5% since January 1, 2017. Now, the Ministry of Antimonopoly Regulation and Commerce of Belarus explains that the issue is under consideration at the level of economic entities — Gomeltransneft Druzhba, Polotsktransneft Druzhba and Transneft.

Informed sources of Kommersant report that on Friday Deputy PMs Arkady Dvorkovich and Uladzimir Syamashka discussed volumes of oil supply to Belarus and its transit for 2017 year. According to the newspaper, the issues were not resolved; in December negotiations will continue both at the corporate and governmental levels.

Transneft confirms the visit of two groups of specialists in the first decade of December to Belarus to study the Belarusian tariff calculation methodologies for oil flow volume. It was discussed with the head of Gomeltransneft Druzhba Siarhei Sasnouski on Friday in Moscow.

The tariff rate increase is specified by the two countries and methodology of 2010, it is approved by tariff departments of Russia and Belarus until February 1. Unscheduled tariff rate growth is possible if drastic changes in business activity occur, but it requires consolidation with Transneft and the Russian government. The tariff rate basically depends on the flow volume, Igor Demin explains. But the rate is still not determined; Russian companies have just filed plans for supply for 2017, they will be considered in early December. "Such sharp increase of tariff rates is not clear, when volumes have not yet been specified," he notes.

The volume supply is the main reason of Minsk's discontent and increase of tariff rates. Since 2016 Russia has been supposed to supply 24 million tons a year until 2024 year. Bust starting from the second half of the year Russia has cut supplies to 3.5 million tons a quarter, and from October - 3 million tons, it relates to failure of Belarus to pay $281 for gas. Minsk demands lower prices for gas and to pay less, according to its own calculations. In October Belarus promised to cover the difference until October 20, but it has not been done yet. In answer to such pressure Minsk announced oil transit increase by 50% since October 12, but then refused it in return for restoration of the volume of oil supplies. Now both parties inform that oil supply does not relate to non-payments for gas, but the issue to be resolved till mid-December. Gazprom doesn't comment on terms of payment of the debt noting that "the matter is dealt with at the governmental level".

Source of Kommersant in the market notes that even with the reduction of oil supply the growth of tariff rates by more than 20% "is excessive".

Partner Herbert Smith Freehills Alexey Panich notes that unilateral tariff increase contravenes intergovernmental agreement of 2007 year, which provides for coordination. In default of agreement on the tariff rate under the prescribed procedure, Minsk can change tariff unilaterally, but only to the level of an average annual inflation. Most likely, the expert believes, the issue will be resolved in negotiating.

Alexey Panich noticed that Minsk had repeatedly tried to deal with matters of bilateral relations by increasing tariff rates, but Russia may apply similar tools, and everything ended with negotiations and lifting of unilateral measures.

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