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Russia ends gas conflicts with Belarus

November 22, 2011, 12:10 UTC+3

In 2012 the price of Russian gas for Russia’s neighbours may be reduced almost by half, and starting from 2013 its price will be linked with the price for domestic consumers

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Gas wars with Belarus seem to be over. In 2012 the price of Russian gas for Russia’s neighbours may be reduced almost by half, and starting from 2013 its price will be linked with the price for domestic consumers.

Gas price for Belarus grew by six-fold over the past seven years. It was linked with oil quotations and was continuously growing. Its was almost three times higher, than the average gas price, set by Gazprom in Russia, Vedomosti writes. Starting from January 1, 2012, however, Minsk will get what it wants: the price of Russian gas will dramatically go down. It will be fixed for the whole year, and, starting from 2013, the gas price will be calculated according to the formula, linked with the gas price in one of the Russian regions. The corresponding documents are expected to be signed on the level of intergovernmental agreements and contracts with Gazprom, two Russian officials, who know how the talks are going on, told Vedomosti.

The gas price, which is being discussed today, is a little over 150 dollars per 1,000 cubic metres (as against the current price of 300 dollars), said one of the officials. Such price concessions will mean for Gazprom the losses amounting to three billion dollars in 2012 alone. The officials did not tell the newspaper what Russia would get in exchange for that. One of them reminded that many joint projects were planned to be implemented, including the merger of MAZ and Kamaz automobile works. A staff member of Gazprom assured that the losses of Gazprom would not be too great: after obtaining 100 per cent of Beltransgaz, Gazprom will get a share in profits coming from gas sales on the territory of Belarus.

All is based on mutual concessions in Russian-Belarusian relations, but since the agreements were not made public so far, it is difficult to guess what was offered in exchange, said Valery Karbalevich, an expert from the Strategy Centre, Minsk, whose words are quoted by Vedomosti. He believes the active support by President Alexander Lukashenko of the Russian plan of the creation of the Eurasian Union could be one of the elements. Another package of documents for it was signed last Friday.

An intergovernmental agreement between Russia and Belarus, which may be signed on Friday, this week, is not only an attempt to avoid gas confrontation between Russia and the neighbouring countries on the eve of the New Year, Izvestia writes. A major discount on the market gas price may attract new members to the economic alliance with Russia.

Aside from the fixing of a new, perceptibly reduced gas price for the whole of 2012 for the fraternal country, it has been suggested that the positions on the basis of which the gas price will be formed in the subsequent years should also be fixed, the sources of Izvestia in Gazprom report.

The economic feasibility of such a big reduction of the gas price, considering the putting into effect of the Nord Stream gas pipeline, remains an open question. Next year, after its second stage is put in operation, the volume of gas transportation will reach the design capacity of 55 billion cubic metres of gas a year. The figure will exceed by almost two-fold the annual amount of gas, transported by the Yamal-Europe gas pipeline, which goes by the Belarusian territory.

According to Vladimir Feigin, director of the Institute of Economy and Finances, whose words are quoted by Izvestia, the granting to Belarus of such a big discount on the gas price is the demonstration of the advantages, connected with the joining of the Customs Union and Common Economic Space. “The example of Belarus is a lesson to others. They should see for themselves that this is the way we treat our friends and allies. It is natural that goods and services should move free on the territory of Common Economic Space,” he said.

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