Russia will sell gas to Belarus at a higher price than in Europe
Russia will not revise the gas price for Belarus, which, according to the agreement reached in February, even before the oil and coronavirus crises, is $127 per thousand cubic meters. At the same time, on the European spot market, “blue fuel” now costs less than $100 per thousand cubic meters.
This was stated today by Russian Energy Minister Alexander Novak, a PolitNavigator correspondent reports.
According to him, the price is fixed in the relevant protocol between the government of Belarus and Gazprom, as well as in contracts between business entities.
“No revision is expected. Our companies interact in accordance with signed documents - the price is $127 per thousand cubic meters,” Novak said.
According to the intergovernmental agreement, the gas price formula for Belarus is as follows: gas tariff in the Yamal-Nenets Autonomous Okrug (the lowest gas tariffs in the Russian Federation) + delivery cost from Yamal to the border of Russia and Belarus. According to this formula, the price should generally be $152 per thousand cubic meters, but in February, President of Belarus Lukashenko negotiated a discount from Russian President Vladimir Putin.
At that time, no one could have predicted the collapse in oil prices, which led (together with a number of other factors) to a decline in gas prices. According to the forecast, the price will remain low until the end of 2020.
Lukashenko demanded that the price for Belarus be reduced to $40 per thousand cubic meters, but at the same time he does not want to change the “brotherly” contract to a standard European one linked to prices on the spot market.
“Yes, probably in 2020, and even in 2021, the price of gas on the European market will remain low. What will happen if in a couple of years gas prices in Europe go above $200 per thousand cubic meters? Let's forget that Minsk asked to give it a European price and return to talking about the cost of gas in the Smolensk region? Belarus needs to assess the prospects for price changes on the European market and settle on one version of the pricing formula: either linked to Russian tariffs or to European hubs. Shuttle pricing will not work,” Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation, wrote in a commentary for the Eurasia portal.
It is worth recalling that at the end of last year, the then Prime Minister of the Russian Federation Dmitry Medvedev openly stated that Minsk could talk about reducing prices, but after signing documents on integration with Russia. However, Lukashenko flatly refused to sign them, citing the primacy of Belarusian sovereignty. It's time to "gather the stones."
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