Russia-Belarus oil and gas war chronicle

Oil and gas conflict of Belarus and Russia has entered a second phase. Moscow has not received the payment for the gas supplied previously and will reportedly halt oil supplies to Belarus again. In response, Minsk will raise the price for transit of Russian oil to Europe starting February 1 blaming Russia for unfair gas price despite earlier arrangements. The ongoing conflict differs from the previous phases, as the sides no longer use “heavy artillery” in the press – there are no statements by President of Belarus Alexander Lukashenko and Russian ministers. Besides, the sides took softer measures this time raising the transit price and halting oil supplies slightly. Experts say the sides seek an agreement and have been exerting genuine efforts therein for already 1.5 year.

EADaily suggests a throwback to recall how Moscow and Minsk tried to do it.

January

— In 2016, Minsk will not receive more discount for Russia’s natural gas than it was specified earlier, said Deputy Minister of Energy of Russia Anatoly Yanovsky who claimed that Belarus tried to negotiate a lower price not through discounts provided, but basing on some other calculations.

— By the decision of Economy Ministry of Belarus, starting from February 1, the price of transit of the Russian oil through trunk pipelines of Belarusian enterprises will grow by 9%.

— Belarusian companies stopped supplies of petrol to Russian traders. According to Izvestia newspaper, Belarusian petrol on the Russian market accounts for 3%-5% of total usually, but this January it made up just 0.2%. “Belarusian companies supply petrol to Russia if there is no more profitable sales markets,” Mikhail Turukalov, Development Director at Analysis of Commodity Markets business agency, told Izvestia newspaper.

— In late December, as they claimed, they had many such markets, while our traders do not buy petrol from them because of rather high prices. Hence, there are no supplies.

— Russia adheres to its commitments on oil supply to Belarus. Minsk too intends to implement its commitments on supply of oil products to Russia, provided that the sales of the previously agreed volumes is in favor of Belarus, said Vladimir Semashko, Deputy Head of the Council of Ministers of Belarus.

March

— Deputy Prime Minister Arkady Dvorkovich said Taneko and Salavatnefteorgsintez, Gazprom’s subsidiary, stopped supplies of oil to Belarus. According to him, the reason is that the companies are suspected in tax structuring when supplying raw materials to Belarus.

— Minsk’s desire to get the Russian gas for a lower price was discussed at the Belarusian-Russian consultations, but no decision was adopted and the contract signed previously is still valid, said Andrey Kruglov, Deputy Head of Gazprom Management Committee.

Actually, Belarus will be receiving gas for $142 per 1,000 cubic meters.

April

— Prime Minister of Belarus Andrey Kobyakov said the Russian natural gas and oil prices are unrealistic. Gas for Minsk should not exceed $80, meantime it is $142, since the ruble has depreciated. The quality of oil has deteriorated, but the price was left unchanged.

— President of Belarus Alexander Lukashenko said the country will not be “a pot boy” for Russia claiming that Belarus is ready to transfer the Minsk plant of wheeled tractors to Russia in exchange of a share in Russia’s oil and gas fields. Belarus imports oil from Russia, Lukashenko said, while having own fields, Minsk could reduce its dependence on Moscow.

— Belarus seeks to recover oil in Sudan, said Deputy Prime Minister Vladimir Semashko after his talks with Sudanese Minister of Oil Industry Mohammad Zayed Awad.

May

— Gazprom Transgaz Belarus applied to the Arbitration Court over delays and underpayment for gas supplied to the regional gas companies previously, Deputy Prime Minster of Belarus Vladimir Semashko said.

— Belarus does not refuse from its commitments to supply oil products to Russia and is going to implement them fully, said Vitaly Pavlov, Deputy Head of Belneftkhim State Concern Board. “We still have more than 6 months. We work within the figure agreed upon earlier. At least, we are striving for that,” he said.

June

— In Belarus, they are going to produce fuel from “municipal solid waste” to substitute oil and gas, said Minister of Natural Resources and Environmental Protection Andrey Kovkhuto.

— Energy Ministry of Russia admitted that oil supplies to Belarus will be reduced because of debts for Russian gas. “It is connected with failure to pay for the gas supplied and delays with supply of oil products,” Minister of Energy Alexander Novak said. Energy Ministry prepared the oil export schedule intending to reduce supplies from 5.3million tons to 3.5million tons. Belarus’ debt for Russian gas reached $220 million by late May.

— Russia has carried out its threat to halt duty-free supply of oil to Belarus in the third quarter by 2.25 million tons. Belneftekhim Company received new schedules of oil supplies. According to Kommersant, the measure proved efficient, and Minsk has already initiated new talks on oil and gas.

— Belarus has made a new proposal to Russia over gas debt, Deputy Prime Minister of Russia Arkady Dvorkovich said. “Talks with Belarus continue. Our colleagues make various proposals and we study them accurately,” he said.

— Minister of Energy of Belarus Vladimir Potupchik said Minsk does insist that Russia implement its commitment concerning equal-income gas price. At present, he said price of natural gas for Belarus enterprises is thrice as high as for the Russian ones.

July

—Referring to its own sources, Kommersant reported that Belarus is ready to redeem the debt for the Russian gas fully. According to the newspaper, halting of oil supplies from Russia will influence the decision of Belarus.

August

— There are breakthroughs in the negotiations of Russia and Belarus over gas issue, Vladimir Potupchik, Minister of Energy of Belarus said. “We will make it public soon,” he said.

— Belarus halted supply of oil products to the Russian market by 56% amid 64% growth of supplies to Ukraine, BelaPAN said referring to official statistics for the first half of the year.

— Belarus and Russia are due to arrive at an agreement over natural gas price and oil supply, Prime Minister of Belarus Andrey Kobyakov said. He admitted that in July GDP of the country fell 0.2% due to oil supply restrictions.

September

— Unless Belarus pays for the debts for the consumed gas, Russia will not increase supplies, Deputy Prime Minister of Russia Arkady Dvrokovich said. In his words, the countries have not agreed to change the gas price yet and the reports on any arrangements do not correspond to reality.

— Minsk suggested Moscow three options of pricing for the Russian gas, and President Alexander Lukashenko charged the government to agree with Russia over one of the options within two days, Belarus Deputy Prime Minister Vladimir Semashko said.

— Alexander Lukashenko accused Russia of limiting oil and gas supplies to Belarus and import of Belarusian goods in Russia. “They suddenly halt oil supply to Belarus for no reason despite our arrangements, claiming that we allegedly fail to pay for natural gas. How do gas and oil come into the picture? This has been leaked to mass media already, though I warned the Russian president: we should avoid such campaign in the media not to darken our relations. much has been done, after all” Lukashenko said.

— Talks with Belarus for gas price continue and no final option has been developed, Energy Minister of Russia Alexander Novak said.

— In the fourth quarter, Transneft plans to reduce supplies of oil to Belarus to 3 million tons. Thus, Interfax said, the supplies of the Russian raw materials to Minsk will continue to fall.

October

— Starting October 10, Belarus will increase Russian oil transportation price by 66%. Such data are brought in the enactment issued by the Ministry of Anti-Monopoly Regulation and Trade of Belarus.

— Belarus and Russia must have equal rights when it comes to prices of energy sources, Alexander Lukashenko told parliamentarians: “How can our cucumber greenhouses withstand competition if they receive gas for $200, while greenhouses in Russia receive gas for $40? Whose electric power will be cheaper? Unequal cooperation affects economy, the Belarusian economy, in the given case.”

— Minsk is negotiating with Iran over oil supply, President of Belarus Alexander Lukashenko said. He explained that in search of sales market Iran is ready to sell oil at a lower price.

— The gas dispute of Belarus and Russia is settled, Alexander Lukashenko said.

“Yesterday, I reviewed the report of the government on oil and gas issues with the Russian Federation. I think the regular battle is over and we have managed to achieve signing of a relevant document. At least, as of yesterday, disputable issues were settled,” he said.

— Deputy Prime Minister of Belarus Vladimir Semashko said the gas price for Belarus will be reduced significantly, and Russia will restore the previous volumes of oil supply via Belarus, and Minsk will not be increasing the transit price. Prime Minister of Russia Dmitry Medvedev refuted the reports on the gas price reduction.

— Belarus will repay the $300 million debt for the consumed Russian gas by October 20, Deputy Prime Minister of Russia Arkady Dvorkovich said. He said the supplies of oil and oil products to Belarus will be regulated. The sides agreed to restore the previous volume of supplies – up to 24 million tons annually.

— Today, Belarus will redeem the debt for the Russian gas, Energy Minister of Belarus Vladimir Potupchik said on October 21. “We are transferring the money today,” he said.

— October 26. Belarus has not transferred any payment for the consumed gas, Deputy Prime Minister of Russia Arkady Dvorkovich said.

November

— At the meeting of the Russian and Belarusian president, the gas issue was not discussed, Deputy Chairman of Gazprom Management Committee Valery Golubev said. According to him, the sides discussed the oil issue only. Golubev said Belarus has not paid for the debt for gas yet.

— Belarus will study alternative sources to import oil, President of Belarus Alexander Lukashenko said. “We weigh several options,” he said adding that oil may be supplied to Belarus via Ukraine.

— Belarus informed Transneft about its plans to increase Russian oil transit price by 20.5%.

December

— During his visit to Baku, Alexander Lukashenko thanked his Azerbaijani counterpart for delivery of 86,000 tons of oil to replace the Russian oil supplies. “It is not the first time that you support us, but it was a one-time support. I can see that any producer of oil must have its strategy. We are ready to push forward as much as it is within the interests of Azerbaijan.”

— Belarus paid an “advanced payment” for the gas supplied from Russia, Spokesperson of the Belarusian Government Vladislav Sychevich said adding that his country anticipates “good will from Russia in terms of sooner resumption of oil supplies specified by the effective intergovernmental agreements.”

— Russia returned the “advanced payment” paid by Belarus earlier and now anticipates payment of the debt Minsk has accumulated underpaying for the consumed gas, Arkady Dvorkovich, Deputy Prime minister of Russia said.

— The gas problem with Belarus can be settled through legal action too, Deputy Prime Minister of Russia Arkady Dvorkovich said. “The case is in the court. Therefore, everything is possible.” In an interview with Vedomosti Russian newspaper, he said the Belarusian partners misinterpret certain norms of the agreement claiming that the gas price must be lower than it is specified in the contract. “We do not agree and we insist on full implementation of the contract,” Dvorkovich said.

January, 2017

— Russia and Belarus failed to make a final agreement on the Russian oil transit price, according to the Ministry of Anti-monopoly Regulation and Trade of Belarus. Minsk notified that starting February 1, the services of Gomeltransneft Druzhba OJSC will be adjusted by 7.7% instead of 5.8% suggested by Transneft, if the sides fail to achieve an agreement.

— Russia has decided to change the schedule of oil supplies to Belarus in the first quarter, Kommersant reported referring to its own sources. The paper writes that Russia’s Energy Ministry has transferred the new schedule to Belarus and the supplies will total 4 million tons annually instead of the anticipated 4.5 million tons.