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Dec 31, 2020
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Did Gazprom and Rosneft Bend Lukashenko?

Did Gazprom and Rosneft Bend Lukashenko?

Photo: Petr Kovalev / TASS

All contracts for next year on oil supplies from Russia to Belarus will be signed before the end of this year, with a number of large Russian suppliers agreements have already been signed. The head of the government of the republic told about it in an interview to Belarusian television Roman Golovchenko

“This year there is no tension, no tension. They are being resolved absolutely on a planned basis (questions about oil supplies for the next year – ed.) … We have agreed with the Russian government that it is not necessary to “put everything under the Christmas tree”. On oil supplies to Belarus, the process of signing contracts with suppliers is underway. Agreements have already been signed with a number of major suppliers on oil supplies by pipeline transport next year, ”the Prime Minister said.

He also added that certain conditions are still being negotiated with some of the suppliers.

“I am sure that by the end of the year absolutely all contracts for the supply of oil to the Republic of Belarus will be signed,” Golovchenko stressed.

Answering a question about the volume of oil supplies from Russia in 2021, the head of the Belarusian government said that it would be determined by expediency.

“The volume of processing will be determined by economic feasibility. But the Russian side is ready to put under the maximum volume actually as much as it will be profitable for us to process, there are 18 million tons, we will process as much … It will depend, of course, on the situation on the market, ”the Belarusian prime minister said.

Earlier it became known about the solution and the gas issue. Last week, the head of Gazprom Alexey Miller and the Minister of Energy of Belarus Viktor Karankevich signed a protocol that defines the procedure for setting prices for gas supplies to the republic in 2021.

The message on the Gazprom website says that the parties were able to come to an agreement on the price, but it was not disclosed.

This month, the Belarusian side also announced the repayment of a debt for gas to Russia in the amount of $ 200 million from a loan from the Eurasian Fund for Stabilization and Development (EFSD). This was stated by the President of the country Alexander Lukashenko

“$ 500 million – a loan … given. I think we need to “tighten up” the economy, if there is an economy, there will be healthcare. <…> And then the second wave began, and I paid 200 million for gas to keep you warm in the winter, and gave 300 million to doctors for COVID, ”he said.

Let us remind you that in May the Ministry of Energy of Belarus announced that the republic was not going to repay the debt for gas to Russia in the amount of $ 165.57 million. The department then said that there was only disagreement between the parties over the price of the supplied raw materials, taking into account its calorie content. At the same time, Gazprom said that they would be ready to start negotiations on gas supplies to Belarus in 2021 only after the settlement of the issue with the country’s debt for raw materials. It was not planned to reduce the price this year. It is $ 127 per thousand cubic meters.

It should be noted that all this time the Belarusian side demanded its reduction, considering it unfair, since the price is lower in Europe. However, the gas price for Belarus is specified in the contract and cannot be changed. The cost of Russian fuel on the European spot market has indeed been declining during the year, but now it has gone up again, so that all of Minsk’s claims are no longer working.

It is worth recalling that Belarus demanded a reduction in oil prices all year long, taking advantage of the sharp drop in oil prices in March, when Russia and Saudi Arabia actually declared an “oil war” on each other. The list of Minsk’s claims also includes the Russian “tax maneuver”, which sharply reduced the republic’s revenues from the sale of Russian oil and oil products, for which Lukashenko demanded compensation.

– Over the past ten years, there have been three major oil and gas crises between Russia and Belarus, – reminds Deputy General Director of the Institute of National Energy Alexander Frolov

– And they all resolved safely. And this was one of them. The essence of the conflict lies in the changes in Russian tax legislation, which transfers the main tax burden to domestic production, and export duties are gradually being zeroed out. This, among other things, deprives Belarus of privileges in buying Russian oil, and with them hundreds of millions of dollars in additional income. That is, starting the conflict, Minsk fought for money.

But even leaving the question of privileges aside, Russian oil is cheaper for Belarus than any other oil. There is no reasonable alternative. So the parties agreed.

“SP”: – And what about the tax maneuver? Minsk demanded compensation …

– There were several options for solving this problem. But, as far as I understand, the specific parameters have not yet been agreed upon. The trade will go according to the previously adopted (pre-crisis) parameters. The maneuver has not yet been completed, so the Belarusians will retain additional income (plus a reduced premium to Russian suppliers). Another thing is that they clearly lost money on their purchases of third-party oil in 2020 …

“SP”: – And what about the price of gas? Earlier it was reported that they also agreed on it, but did not disclose it. Do you think it will be lower or higher? Or will it remain the same?

– Again, Minsk traditionally starts a dispute over gas prices when quotations on European stock exchanges fall. Now they have returned to levels higher than last year, therefore, the usual price parameters for Belarus will be very profitable.

“SP”: – Indeed, the price of gas in Europe is growing, which means that the demands of Minsk are decreasing proportionally? He wants it to be like with Europe? So, logically, you should accept the price increase? By the way, to what extent is the rise in gas prices a long-term trend?

“They want it to be the cheapest in Europe, or rather, to be on the principle“ price for consumers of the Smolensk region + transportation costs ”. But there are no prerequisites for transferring Belarus to such a pricing formula now.

SP: – In November, the Belarusian side paid off the debt for gas supplies to Moscow in the amount of $ 200 million. It’s all? Is the issue of debts cleared?

– As far as I know, yes. The issue of paying this amount was linked to the start of negotiations on supplies for 2021.

“SP”: – How long do you think the agreements will work? Is there any confidence that Minsk will again not demand a price cut, refuse debts and demand compensation? Is this a purely political or economic question?

– Will definitely demand. This is inevitable. How inevitable there was a conflict after agreeing on the parameters of the final round of the big tax maneuver in 2018. For Belarus, I repeat, this is a question of shortfalls in income. It is another matter that Russia, and this is simply an amazing fact, has its own economic interests. And Minsk, apparently, is not yet ready to go for greater integration so that additional preferences in the field of oil and gas prices become justified. For example, tax codes could be synchronized. But the leadership of Belarus wants to climb on the tree and not to peel the sirloin parts. This in itself is not punishable, of course …

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