Belarus reaffirmed Russia’s refusal to reduce the price of gas

The heads of the governments of Belarus and Russia Andrei Kobyakov Dmitry Medvedev during telephone talks on the oil and gas cooperation on Monday confirmed the preservation period of the mechanism of formation of gas prices for commercial organizations of Belarus, reported the press service of the Belarusian Council of Ministers.

“In this connection, the Belarusian side confirmed its readiness to transfer reserved since the beginning of the year funds to the accounts of the suppliers of gas”, said the press service, quoted by “Interfax-West”.

A few hours earlier the President of Belarus Alexander Lukashenko said about the dispute with Russia on oil and gas supplies. And Vice-Premier of Belarus Vladimir Semashko said that the sides agreed on reducing the cost of the Russian gas price for Belarus this year and determined “trajectory of decline rates” in the coming years.

However, the Russian Prime Minister Medvedev later said that the discounts on prices for gas for Belarus is not provided, they remain the same, and the price is calculated according to the existing formula. Deputy Prime Minister Arkady Dvorkovich said that the debt of Minsk to Moscow for gas exceeds $300 million and must be redeemed before 20 October of the current year. In turn, Semashko admitted that it is possible to repay the debt until October 25, but hoped to agree on installment payment until the end of 2016.

Belarus since the beginning of the year seeking lower prices for Russian gas from $132 to $73 per 1 thousand cubic meters and do not acknowledge any debt for deliveries starting in 2016. 12 Sep Lukashenko instructed the first two days to reach a final agreement with Moscow, but it failed to achieve until now. This was followed by a unilateral increase in the price of transit of Russian oil, followed by a statement on the negotiations on the purchase of Iranian oil to Belarus.

Belarus and Russia during a telephone conversation between two Prime Ministers also agreed on the intergovernmental payment for gas supplies, which will allow to 1 July 2019 to ensure equal conditions for the price of gas for energy producers by 1 January 2025 for all others consumers of natural gas, quoted by the press service of the Council of Ministers of Belarus, “RIA Novosti”. “The Russian side confirmed its readiness to apply the mechanism of budgetary compensation, the proceeds of which will be used by the Belarusian side, primarily to reduce gas prices for domestic consumers”, stated in the message. The Belarusian side considers these agreements as a “compromise and appropriate in the interests of both parties.”

The gas conflict of Russia and Belarus

In early may, belonging to “Gazprom” the Russian company “Gazprom transgaz Belarus” has addressed in Arbitration court of Belarus with a complaint of untimely or incomplete payment of gas, the Belarusian regional gas companies.

On may 2 the Minister of energy of Russia Alexander Novak said that the debt of Belarus for delivered in four months gas was $125 million, the Belarusian side denied the existence of the debt. According to the Belarusian side, in 2015 in the framework of the intergovernmental agreement Moscow had to go to the “market price” (Belarus demands to reduce the price of Russian gas supplied “Gazprom” almost twice from $132 to $73 per 1 thousand cubic meters and makes the payment based on this value). Representatives of the Russian government, by contrast, emphasized that this transition is not a duty, but only the intention.

May 28 Alexander Novak said that the price of gas for Belarus will remain at that level, which determined the current contract ($132 per 1 thousand cubic meters; are calculated in dollars as the sum of the price of gas in the Yamalo-Nenets Autonomous Okrug (about $36 at the exchange rate on 1 January), transportation to Belarus (about $90) and storage in UGSF in Russia (about $6)), and Russia has no plans to reduce it in the third quarter.

On 31 may, the Chairman of the Board “Gazprom” Alexander Medvedev has informed that the debt of Belarus before “Gazprom transgaz Belarus” (“daughter” of “Gazprom”) has exceeded $200 million.

In June 2016, the two presidents Vladimir Putin and Alexander Lukashenko instructed the heads of energy departments to resolve the dispute about the price of gas.

In late August, the media reported that Moscow and Minsk after a series of meetings at the level of ministries and Deputy Prime Ministers tentatively agreed on a new pricing scheme for Russian gas. Under this scheme, the cost of gas for Belarus is expected to decline to $100 per 1 thousand cubic meters from the current $132.

September 11, Lukashenka said that Russia and Belarus are close to agreement about the price of gas. 12 Sep Lukashenko instructed Vice Premier of Belarus Vladimir Semashko to achieve a final agreement with Moscow

In early October it became known that Belarus since 11 October intends to raise the tariff for transit of oil through the main pipeline “Gomeltransneft Friendship” and “Polotsktransneft Friendship” in 1,5 times. The corresponding decree on 28 September released by the Belarusian Ministry of Antimonopoly regulation and trade. Earlier Minsk has raised the tariff in this direction in February 2016 is 10.4%

On 10 October President of Belarus Alexander Lukashenko said that Russia and Belarus had settled the issue in the field of oil and gas supplies.