Lukashenka Asks Putin for a New Loan to Pay an Old One

Minsk and Moscow can resolve disputes around Belarus' debt for Russian gas and oil supply volumes.

Kommersant managed to find out possible conditions of a compromise. According to the newspaper, Minsk is ready to pay $425 million of debt for gas, if it receives new tranches of the loan of the EEC anti-crisis fund. In addition, Belarus wants new benefits in the form of $300 million of annual compensation for high gas prices.

Russian Ambassador to Minsk Alexander Surikov said yesterday that issues regarding oil and gas supplies between Russia and Belarus would be resolved until December 20. "The problem is being resolved, he believes. - And the other day all issues touching upon oil and gas will be positively resolved."

It is about disputes between Moscow and Minsk considering Russian gas prices and volume of oil supply to Belarus. Due to the different approaches to the calculation of gas prices Belarus is subject to pay Gazprom about $300 million for the first six months, which had to be paid up to October 20. In its turn, Russia decreased oil supply (24 million tons a year should be supplied in 2016-2024). Since the mid-year quarterly volumes have dropped to 3.5 million tons, and since October — up to 3 million tons.

"Normal payments for gas initiate normal oil supplies. We adjust the balance and all questions will be resolved," Surikov notes. The schedule for the first quarter of 2017 implies growth of oil transportation up to 4.5 million tons, the presidential advisor of Transneft Igor Dyomin confirmed.

According to Dyomin, at the yesterday's meeting of heads of Gomeltranneft Druzhba Siarhei Sasnouski and Polatsktransneft Druzhba Vasil Drobotau it was agreed that Transneft to grant Minsk the position on tariffs for pumping until December 23.. The new rate is valid since February 1, 2017.

Progress in negotiations relates to the new proposals of Belarus on gas debt repayment. Deputy Prime Minister Arkady Dvorkovich voiced it on December 8, and on the same day the Council of Ministers of Belarus stated that it had made advance payment for gas "as a gesture of good will". Kommersant is informed by sources familiar with the situation that Minsk expressed its willingness to pay $425 million direct debt for Russian gas. But in the near future Belarus would like to get the third and the fourth tranche from the EEC Anti-Crisis Fund.

This year Minsk has already received two tranches ($800 million), the total amount of an approved loan is $2 billion divided into seven parts. On Tuesday Finance Minister of Belarus Uladzimir Amaryn said he expected $300 million until the end of the year. The head of the EDB (manages funds) Dmitry Pankin informed Kommersant that the Fund's Board had not yet considered the issue and he failed to say whether it happened until the end of the year. Minenergo and Gazprom of Russia did not comment on the situation.

According to Kommersant, Russia has promised de facto to subsidize gas deliveries for the Belarusian energy sector since the second half of 2016 until the first half of the year 2019 in return of repayment of gas debt. The subsidy should equal to approximately $300 million a year, but Minsk wanted more.

The mechanism of the grant policy should be as follows: Belarus will be able to replenish its budget with exports duties from Russian oil. The volume of this oil will be restricted: it must be consistent on a quarterly basis and will be included in the overall balance of supply, which amounts to 24 million tons (i.e. delivery to Belarusian oil refineries will fall) in 2017. Given the current oil price "the benefit volume" to generate the subsidy of $300 million may equal to 3 million tons a year.

Although the scheme is generally agreed upon, there are some differences; in particular, according to some experts, Belarus would like to increase oil supply to 26 million tons. But the debt issue is the most urgent one: Russia requires an immediate debt repayment, and Minsk sets its own conditions.

The head of Small Letters Vitaly Kryukov notes that disputes with Belarus on oil and gas issues are an inevitable part of relations between the two countries: Minsk is seeking favourable conditions for itself, and Moscow, given geopolitical arguments, meets some concessions. But, he mentions that Russia is not ready to provide discounts and looks for "softer compensation schemes". Kryukov points out that oil prices raise, and it's easier for Moscow to compromise.