Gazprom keeps up reputation with compromise in Russo-Belarusian oil dispute

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October 17, 2016 11:22
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The dispute about pricing terms of Russian gas supplies to Belarus was resolved formally on Russian terms, but practically with price concessions for Belarus. The compromise is only a temporary solution and is likely to be revised, should world gas prices go down and competition on the European market increases.

Russo-Belarusian negotiations over gas price for Belarus lasted nine months and formally ended on Russian terms - the price of gas and the pricing formula for Belarus remained unchanged. Russia confirmed her commitment to creating a single hydrocarbons marked by 2025. However, the parties signed a protocol on gas, envisaging compensation by the Russian government to the Belarusian government of the gas price difference with the bullish factor, according to which by 2019, equal netback pricing will be progressively established for Belarus by Russia. In numerical terms, Belarus will receive about USD 400 million in 2016, USD 800 million in 2017, and probably the same amount in 2018. Belarus is likely to use the so-called "inter-budgetary compensation" to pay off her other debts. As regards the oil issue, the parties reverted to the previous conditions: Russia committed to restore the supply of oil to 24 million tons per year, and Belarus to abolish the increase in tariffs for Russian oil transit.

Gazprom is the main beneficiary in the agreement. It should be noted that in 2016-2017, Gazprom will stand many trials in Europe for revising the pricing formula: for instance, with German Uniper (E.ON), French Engie, Polish PGNiG, Turkish Botas, Shell, as well as Dutch and Danish national suppliers. The Russian budget will suffer some losses, unlike Belarusian producers and the Belarusian budget. The Russian monopolist Transneft is likely to win some benefits too, so as during the dispute with Belarus it has tested new oil facilities in Ust-Luga and increased load on the BPS-2.

Yet another Russo-Belarusian gas dispute and its resolution have demonstrated that the Kremlin has become resistant to Minsk’s negotiation tactics and retained only a minor responsiveness.

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President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.

President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.

The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.

The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.

The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.