Belarus to pay with sovereignty for Russian gas?
Under the deal signed by Belarus and Gazprom in the last-ditch talks on December 31, 2006, Belarus must pay 67 percent of the average gas price for EU. But even today we still pay less then we have to, economist Leanid Zlotnikau tells the European Radio for Belarus.
“The thing is that it is less than 67 percent of the average price in Europe. The Russians simply made a step forward and reduced the price to less than 67 percent as from the New Year. These are preferences or a certain deviation from the contract”.
According to Zlotnikau, Russia gave preferences to Belarus both in the first and the second quarters of 2008. His colleague Yaraslau Ramanchuk says that gas is a political issue.
“This is a consequence of the balance of political forces. There is nothing else”.
According to the economist, it will be Belarus’s sovereignty that this country will pay for the cheap gas.
“They would not definitely want to do it, because they (the Russians) think that in 2010-2011 there could be a situation when they could use gas as leverage… Belarus will have a lot of debts. When it faces a sharp deterioration of the balance of payments, Russia will be the only source of resources. Russia will say: that’s fine; we will give you $5 billion or $10 billion. The price for this money will definitely be Belarus’s sovereignty”.
The European Radio for Belarus called the Russian investment company Broker Credit Service. Company’s analyst Katsyaryna Krauchanka said that the average price for gas in Europe could hit at least $400 per 1000 cubic meters in 2008. She based her analysis on Gazprom’s estimates.
“In the fourth quarter of 2007, the average price for Europe was $300 per 1000 cubic meters. Our forecast for this year is $350. Gazprom hints that the price could go up to $400.
In 2007, an average oil price was $72 per barrel. Because oil prices remain high, gas prices continue to grow too. They will continue to depend on oil costs. If oil price continues to grow, gas prices could go over $400”.
Under the deal with Gazprom, Belarus will have to pay 80 percent of the average European price of gas in 2009.
Clearly, the price set in percents leaves a lot of space for maneuvering. There still remains a lot to be agreed, including what European price should be a basis for Belarus. It may sound surprising but the price differs in various countries.
Under the deal, Belarus now pays two thirds of the European price, but the price is set at $128. Mathematically, it would mean that European countries pay $190. In reality, they pay much more. Therefore, Belarus once again managed to get a discount from Gazprom. It could mean that Belarus would like to get a discount next year as well.
The situation about the price for 2009 remains unclear, but Russian ambassador in Minsk Alexander Surikov says that the gas price for Belarus will not be raised up to the end of this year.
According to Surikov, bilateral agreements envisage that the gas price can be raised only once and not more than by 7 percent in the course of the year. Gazprom has already exhausted the limit.
Another good news is that the price of $128 almost fits perfectly in Belarus’s plans. The Belarusian energy ministry said earlier that the country’s budget for 2008 was based on the gas price of $125 per 1000 cubic meters or just $3 less than we are facing now.
Meanwhile, households pay more than the state. Economist Leanid Zaika says:
“We buy cheap gas, but what we produce from this gas – expensive heat and electricity – is paid for by the population”.
In the words of the economist, the state should not be worried. When the gas price grows, we also raise the prices for our products, Leanid Zaika says.
“The costs of milk and meat will also grow. We will sell it to the Russians. We can also raise prices for trucks, etc.”
The growth of gas prices for Belarus is inevitable. If we want to receive gas according to the Russian domestic tariffs, we will have to become part of Russia, continues the analyst.
“If we want to get the Russian gas for their domestic prices, we have several options. Becoming part of Russia is one of them”.
Leanid Zaika notes that there are other options: to create a free-trade zone with Russia (when all the goods will have equal price for all) or to form a customs union. However, neither of the options will satisfy Russia.
“Russia objects to a free-trade zone. Russia wants more advantageous conditions, i.e. to sell gas at higher costs. These two options are very complicated. Nobody wants to create anything”.
Thus, Belarus can soon face a choice: to pay for gas as much as Russia will demand or to become part of the eastern neighbor.
