28 November 2011
Belarus and Russia signed a comprehensive gas deal last Friday grating the former a considerable price discount on gas imported from Russia. According to Russian Prime Minister Vladimir Putin, Belarus will pay USD 164/tcm in 1Q12, while the average price for other importers is expected at USD 400/tcm. Also the gas price for Belarus in 2013-14 will be linked to Russia’s domestic gas prices with no other details on this disclosed. In return, Belarus agreed to sell 50% in Beltransgas to Gazprom for USD 2.5 bln, implying the latter will eventually consolidate a 100% stake in Belarus’ gas transportation monopolist. Beltransgas transported 43 bcm of Russian gas in 2010. Vitaliy Vavryshchuk: The deal shows Russia is generous in granting gas price discounts when control over gas transportation infrastructure in neighboring countries is at stake. We believe Russia is looking for a similar kind of deal from the Ukrainian government, which is desperately seeking lower gas prices for 2012. At the same time, gas price concessions for Ukraine are likely to be less significant and strictly limited in time, as the incredibly low price for Belarus is also a part reward for its economic integration efforts with the Russian-led Customs Union.