The gas price has been settled, but the issues surrounding the unified energy market remain unresolved

Russia and Belarus have reached an agreement on gas supplies for the next two years, setting the gas price for Belarus at USD 128.5 per thousand cubic meters. However, plans to unite the markets for oil, petroleum products, and gas between the two nations still lack clarity, presenting challenges in the creation and development of free economic zones for both Belarus and Russia.

For the years 2024-2025, Russia and Belarus have locked in the terms for gas supplies. As per the previously established agreement at the end of 2022, the fixed price for Russian gas to Belarus will be USD 128.5 per thousand cubic meters. This falls short of Lukashenka’s aspirations for lower tariffs.

While last year’s negotiations over the gas price tag did not lead to a scandal, they extended until December. The positive outcome for Belarus was the agreement to maintain a fixed price without further changes for the next three years (2023-2025). However, the actual price was not disclosed. Analysts predict that despite the increasing shift to settlements in Russian rubles, the currency peg for gas supplies will likely persist. Consequently, Belarus’ gas procurement costs will rise due to the depreciation of the Belarusian ruble against the US dollar.

It’s noteworthy that over the past seven years, little has changed regarding the gas issue, despite disputes between Minsk and Moscow. Since 2017, the gas price has remained relatively stable, just below USD 130 per thousand cubic meters.

During a joint board meeting of economic departments in Brest, the head of the Russian Ministry of Economy, Maxim Reshetnikov, highlighted that certain union programs, especially the plans to unite the markets for oil, petroleum products, and gas, require additional attention. These are crucial issues for Minsk and Moscow, and quick resolutions are not feasible. In contrast, the unified electricity market is set to commence operations on January 1, 2024, with no specified deadlines for the overall energy market. Reshetnikov mentioned that nearly 90% of the planned activities of the Union programs have been completed, with thirteen of them fully implemented.

During the same event, the Ministry of Economy of Belarus and the Ministry of Economic Development of Russia signed a memorandum of cooperation for the creation and development of special (free) economic zones, expected to possess special investment attractiveness.

As part of the loan agreement signed in the fall of 2022, providing Belarus with a Russian state loan totaling up to RUB 105 billion (about USD 1.2 billion), the Russian government approved 20 projects amounting to RUB 74 billion (about RUB 800 million). Reshetnikov noted that the business has already received over 2.5 billion Russian rubles (about USD 27 million). However, the pace of allocating Russian funds for import substitution is not characterized as fast.