Russia and Belarus for the first time agreed on gas prices for three years

The price of Russian gas for Belarus will be fixed for the first time for three years, Prime Minister of the Republic Roman Golovchenko said on December 20. According to him, this will create “stability” and Minsk will be able “to proceed from specific figures in its macroeconomic forecasts” (quoted by Sputnik Belarus ).

According to Golovchenko, the agreed price for gas “is based on the Belarusian proposal.” He added that in the near future the relevant ministries would sign a commercial agreement on gas supplies to Belarus.

On December 19, Russian President Vladimir Putin and Belarusian President Alexander Lukashenko held talks in Minsk. Following the meeting, Lukashenka said that the countries agreed on a fixed gas price in 2023. “The price of Russian gas for Belarus next year is fixed and profitable,” Lukashenka said (quoted by Interfax). He also added that the discussions concerned the concept of a single gas market and pricing for the next three years.

Before the talks between the leaders of the two countries, Deputy Prime Minister of the Russian Federation Alexei Overchuk (who oversees international relations) told reporters that Minsk “traditionally wants the price [на газ] was close to Russian. On December 16, Lukashenko said that the Belarusian side insists on equal conditions with the Russian Federation for the work of entities in the field of gas pricing.

In early September of this year, Putin said that Russia and Belarus would sign a document on the creation of a single gas market within the Union State by December 1, 2023. It also provides for the conclusion of an agreement on the unification of the markets for oil and oil products and an agreement on a single electricity market.

Previously, the price of Russian gas for Belarus was agreed annually. For 2022, it was set at $128.52 per 1,000 cubic meters. m for the republic, as in the previous year. Since April of this year, Belarus has switched to paying for gas in Russian rubles. Changes in the actual cost of gas were not reported.

In 2019-2020 Belarus paid a little less for gas – $127 per 1,000 cubic meters. m, in 2018 – $129 per 1000 cubic meters. m.

Analyst FG “Finam” Sergei Kaufman believes that the new contract price for gas for Belarus will slightly exceed the current one. He notes that gas exports to the republic are profitable for Gazprom, but the marginality of supplies is absolutely incomparable with exports to Europe and even to China. The price at which Russian gas is supplied to Belarus, according to him, is due not to economic, but to political reasons. “At the moment, Russia has no ally closer than Belarus,” the expert states.

Deputy Director General of the National Energy Institute Alexander Frolov also believes that the new gas price will not differ much from the current one. In his opinion, it can even be somewhat reduced so that its level corresponds to the level of gas prices in the Smolensk region bordering the republic. From December 1, 2022, the marginal cost of gas for industrial consumers in the Smolensk region was set by order of the Federal Antimonopoly Service in the range of 5587-5690 rubles. for 1000 cu. m. The size of the discount, according to Frolov, may be within 1000 rubles. for 1000 cu. m (about $15 at the current exchange rate of the Central Bank).

Kaufman adds that against the background of the NWO and its consequences, the interdependence of the two countries increased, which probably led to the conclusion of a three-year contract right away. Frolov agrees: “The current situation creates many factors that accelerate the processes that have been going on over the past 15 years.”

Belarus will save billions of dollars on Russian gas compared to prices in Europe, says Vice-Rector of the State Academic University for the Humanities (GAUGN) Vyacheslav Sutyrin. Minsk will direct this amount to the fulfillment of social obligations, thus strengthening domestic political stability, he believes.

Such a scenario is beneficial for Russia: firstly, Moscow needs Belarus as a stable ally, and secondly, the Kremlin links gas supplies to more complex things like allied programs and strengthening military-political cooperation, the expert concludes.