Page 9 - FSUOGM Week 37 2021

FSUOGM POLICY FSUOGM

Russia, Belarus fix discounted gas price

for 2022, stop short of market merge

EUROPE RUSSIAN natural gas major Gazprom and Bela- Reportedly, the point of contention block-
rus have set a discounted gas price of $128.5 per ing the intregration agreement might be the gas
The two countries haev 1,000 cubic meters (kcm) for 2022, according to price as Belarus insists on buying gas at Gaz-
reportedly stopped short the report by Kommersant daily. This effectively prom's tariff for the Smolensk Region ($68/
of moving to integrate extends the current gas prices for next year and kcm), while Gazprom wants to sell gas at the
their energy markets. will not index the prices for inflation. netback at the German border. Another dis-
As reported by bne IntelliNews, gas prices cussed solution is to fix the gas transport tariff
are at all-time high in 2021 in Europe. This week to Belarus' border.
the European gas prices has set another record "In 2019 and 2020, Gazprom sold 20.3bcm
at $700/mcm, rising by 40% in the last month, (bn cubic meters) and 18.8bcm of gas to Belarus
from $500/mcm to $700/mcm, setting records (10.1bcm in 1H21). From the financial stand-
the entire way, BCS Global Markets wrote on point, the worst-case scenario for Gazprom
September 13. would be switching Belarusian deliveries to the
In the meantime, while President Vladimir Russian gas tariff," VTB Capital commented on
Putin promised to back up Belarusian President September 13.
Lukashenko in his growing showdown with the The analysts at VTBC estimate that, if vol-
West, he offered little in the way of concrete sup- umes remain at historical level, Gazprom could
port in a meeting between the two heads of state lose around $1bn of EBITDA, or 3%, starting
on September 9. from 2024 in such a case.
The two countries have reportedly stopped "However, given that no details on gas prices
short from integrating their energy and, in particu- in the unified market have been determined so
lar, gas markets. The document on the creation of a far, for now we assume that the price for Belarus
unified market is to be signed by December 2023, remains at the current level in USD [US dollars].
according to Vedomosti daily, with all the key prin- We treat the news as not market-moving at this
ciples determined by July 2022. point," VTBC notes. ™

Week 37 15•September•2021 www. NEWSBASE .com P9