Belarus wants to save on Russian hydrocarbons again

In line with expectations of some experts, an agreement between Moscow and Minsk on oil export duties for Belarus was just a temporary decision. The matter is that the agreement on duty-free supplies of oil for the Belarusian domestic consumption totaling 6.3m tons signed by deputy PMs Igor Sechin and Vladimir Semashko cannot come into force if it is not ratified by February 15.

Meanwhile, the spring session of the Belarusian parliament starts only in April. In this case there is deliberate procrastination of a purely technical procedure by Alexander Lukashenko who is shifting formal responsibility onto the Belarusian legislature. A similar approach has been several times employed by the Belarusian leader, e.g. concerning recognition of independence of Abkhazia and South Ossetia, which the parliament has not yet passed. It is not ruled out that currently not willing to sharpen relations, Moscow will wait for ratification of the Sechin-Semashko accord but even without it will be delivering 6.3m tons of oil duty free for the republic's domestic needs. This will give the Belarusian side an opportunity to take in substantial part of the duty free oil and on July 1 to start another round of negotiations, appealing to the charter of the Customs Union of Russia, Belarus and Kazakhstan already in force. Having launched a counterattack on the oil front, Minsk became active on the gas direction too.

The Belarusian side again started insisting on keeping low gas prices in exchange offering Gazprom to participate in the project of building a second unit at the Berezovskaya electrical power generating plant, one of the Belarusian largest power plants, totaling $490m. However, it is absolutely clear that the electrical energy sector is not a major priority for Gazprom.

The Russian gas giant would be much more interested either in raising gas prices for Belarus to a free market level, or in obtaining control over the Belarusian gas transportation system. Thus, in this case there is an attempt to divert attention and continue getting Russian hydrocarbons at preferential prices for as long as possible. At the end of the day, Belarusian authorities have no other way out, if they intend to maintain the current level of subsidies to the domestic industry and social subsidies to the population in the full volume that are to a great extent the foundation of the existing political regime's popularity there.

By Stanislav Mitrakhovich, NESF leading expert