INTERVIEW: Minsk sees Russian gas price for Belarus down to $80

MINSK, Apr 1 (PRIME) -- Minsk says that the price for Russian natural gas exports to Belarus should fall to U.S. $80 per 1,000 cubic meters from the current $142, due to the ruble’s exchange rate against the U.S. dollar, Belarusian Prime Minister Andrei Kobyakov said in an interview to PRIME released Friday.

“Speaking of the natural gas, its price stood at $165 per 1,000 cubic meters in early 2014, when the Russian ruble was at 32–33 per U.S. dollar. As of January 1, the gas price amounted to $142. But the U.S. dollar equaled more than 60 rubles. It is only logical that the gas should cost about $80 for us, but we have the price of $142,” he said.

The problem here is that all calculations between the countries are done in Russian rubles, but for energy sources Belarus has to pay in U.S. dollars.

“The amount of trade in national currencies amounted to about 82% last year. Belarusian exports to Russia are almost 100% denominated in Russian rubles. Imports are also in Russian rubles. But we buy all energy sources for U.S. dollars,” he said. “We could have paid in rubles, but the pricing is tied to the U.S. dollar.”

Speaking of an agreement, under which Minsk is to supply 1 million tonnes of light oil products to Russia in 2016 in exchange for 23 million tonnes of oil, he said that there is a problem that gasoline in Russia is very cheap.

“There is a problem, and the Russian side has outlined it, about supplies of gasolines refined from Russian oil to Russia. We have always said that the Russian market is a priority for us, but it must not be loss-making,” he said. “If we receive minus $100 per every tonne of gasolines, no economy will be able to endure that.”

Belarus also noted a decrease of quality of the Russian oil even though the price remained the same. “We have a constant discussion, and prices are also discussed. For now we find a common ground. But there are problems…For instance, we would like oil that comes to Belarus through the pipeline to be of a higher quality, as its quality is going down. But the price remains the same,” Kobyakov said.

Moscow and Minsk agreed to make a separate flow of oil with a lower content of sulfur and improved fractional composition for exports of it to Belarus and for transit to third countries, he said.

Rejection of connection to the U.S. dollar in pricing will also bring closer the possibility of establishing a single currency in the Eurasian Economic Union among Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan.

“We should switch to pricing in national currencies. Then the possibility of forming a single currency will become closer than if we use currencies of third countries in mutual settlements and pricing,” he said. “Only then we will be able to build a real economic area without borders and with equal economic conditions throughout the economic space when we make pricing in national currencies, then the possibility of a single currency will be real.”

The two countries have decided to suspend a project between largest truck makers MAZ and Kamaz, which was initiated in 2012. “Taking into account difficult economic conditions that formed today on the car markets of the Eurasian Economic Union, the council of ministers of the Union State has decided to suspend the project at a meeting in September 2015,” Kobyakov said.

The most important thing for Belarus in integrative projects with Russia is development of companies, while Moscow has a different approach. “I think that the Russian side has a tendency to emphasize control over property with a future possibility of disposition. We are more interested in the efficiency of management,” he said.

He quoted heavy off-road vehicle manufacturer MZKT as an example. “We were just offered to sell a controlling stake. On the one hand, money doesn’t grow on trees, on the other – we did not fight for that. Raising money is an important task, but it is not a priority. The main thing is to ensure efficient operation of a company in the long run,” he said, adding that the partners are still trying to find mutually beneficial solution with MZKT.

He also said that Minsk would like Moscow to cover with the state support not only purchases of Russian agricultural equipment, but also the Belarusian equipment, as they are often made from Russian component parts. But the problem is still under discussion.

Russia and Belarus have discussed the issue of increasing the retirement age, and Minsk hopes that Moscow will decide to raise it in unison with Belarus, he said. Previously, Belarusian President Alexander Lukashenko said he will sign a decree to raise the retirement age by three years from January 1, 2017.

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