Unified Defense Space Almost Established, Unified Energy Market Still Absent

On December 6, a session of the Supreme State Council of the Union State was held in Minsk. The meeting between Lukashenka and Putin during the event can be considered relatively productive, as several important protocols were signed. At the same time, however, some critical agreements were not reached. The outcome underscored an ongoing trend: integration between Russia and Belarus is progressing much faster in defense and security matters than in the energy sector.

In total, the event resulted in the signing of two decrees, four resolutions, three decisions, and two agreements, including:

• Agreement on Guarantees of Mutual Security: This document outlines procedures to be followed in case of a real threat to the sovereignty of one or both states. It also includes provisions related to the deployment of Russian nuclear weapons on Belarusian territory.
• Resolution on “Creating Affordable Tariffs for Communication Services and Data Transmission within the Union State”: Roaming charges will be abolished starting March 1, 2025. The tariff will include at least 300 minutes of free incoming voice calls and a minimum of 5 GB of data per month. Negotiations on the phased abolition of roaming between the two countries began in 2018, with a “roadmap” signed in 2019. It has taken over six years to agree on “fair tariffs.”
• Interstate Agreement on the Formation of a Unified Electricity Market: This will be implemented in phases, taking into account the parallel operation of the two energy systems and their technological specifics. The first stage of creating a unified electricity market will begin in 2025 with the development of its operational rules. However, there is no clear timeline for completing this work, even though the unification of all energy markets between Belarus and Russia has been stipulated in the 1999 Treaty on the Establishment of the Union State.

The launch of the Belarusian Nuclear Power Plant (BelNPP) has intensified Minsk’s need to export electricity. However, as long as there is no unified “electricity space,” exporting Belarusian electricity to Russia’s surplus market (currently the only potential buyer) is either impossible or unfeasible. Energy experts believe that Belarusian electricity cannot compete with Russian producers on natural gas prices, as Belarusian electricity generation remains heavily dependent on natural gas.

Consequently, Lukashenka again emphasized Belarus’s interest in the swift establishment of a unified market for gas, oil, and petroleum products with Russia. According to Putin’s promises from September 2021, the relevant agreement was supposed to be signed by December 1, 2023. However, there has been no progress on this front since, nor is any expected soon—primarily because the two sides envision the “unified market” differently. Minsk insists that such a market cannot exist without equal gas prices. Meanwhile, Russia maintains that the principle of comparable prices for oil and gas is not essential for creating unified energy markets.

Under current agreements, the price of Russian gas for Belarus is fixed at $128.5 per thousand cubic meters for 2024-2025. The Kremlin views the supply of oil and gas to Belarus on preferential terms as evidence of a privileged partnership and a measure to support the Belarusian economy.

As for oil, in late November, Russian Prime Minister Mikhail Mishustin signed an order extending the intergovernmental agreement with Belarus on regulating cooperation in oil and petroleum product exports. According to the official document published in Russia, the agreement, originally set to expire on December 31, 2024, has been extended until December 31, 2026.

Breakthrough decisions in the allied energy sector, which includes two major components—oil and gas, and electricity—are unlikely in the coming year.