PRESS: Moscow, Minsk settle gas dispute tentatively, price at $100

MOSCOW, Aug 26 (PRIME) -- Moscow and Minsk have preliminary agreed that the price for Russian natural gas for Belarus will fall to U.S. $100 per 1,000 cubic meters from about $132, and Belarus will redeem its debt, Kommersant reported on Friday citing sources.

In July, Russian Energy Minister Alexander Novak said Belarus owes Russian gas giant Gazprom $270 million. Gazprom said Minsk underpays the company for gas, while Belarusian Energy Minister Vladimir Potupchik said that the fair price would amount to $73 per 1,000 cubic meters instead of $132.77. Minsk did not acknowledge the debt.

Changes will also be applied to the pricing formula, which now includes gas prices at the Yamal Peninsula, as well as transportation and storage and sales costs. Sources familiar with the matter told Kommersant that the new formula will be completely ruble-denominated, which eliminates Belarus’ risks due to U.S. dollar fluctuations.

From 2017, the gas price will be defined as an average price in Russia’s gas transportation system plus a multiplying co-efficient. This will translate into a price for 2017 of 4,050 rubles per 1,000 cubic meters plus a 1.48 co-efficient, or about 6,000 rubles per 1,000 cubic meters. For the remaining months of 2016, the price will be set at 6,300 rubles, Kommersant reported citing sources.

The countries also agreed that the co-efficient will be gradually cut to 1 by 2025.

If the new agreement is approved, Belarus will fully redeem its debt to Gazprom under old prices, including penalties, while Russia will restart supplies of oil to Belarus which were frozen due to the dispute. The only remaining issue is the date when agreement comes in force. Minsk wants it to be on July 1, while Moscow on August 1.

Belarus’ debt for January–June gas supplies amounts to about $300 million, the business daily said.

Sources told the business daily that the agreement was coordinated at a working level, but is yet to be approved at a higher level. A Gazprom representative told Kommersant that no agreement has been reached so far.

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