Russia, Belarus plan single energy market

Russia and Belarus appear to have made some progress towards integrating their economies, having agreed this week to establish a common energy market.

Russian President Vladimir Putin met with his Belarusian counterpart Alexander Lukashenko in Moscow on 9 September, and intend to sign documents establishing a unified gas market until December 2023. Putin said Moscow has agreed to keep gas prices for Belarus in 2022 at this year's level at a time when prices in western Europe are at record levels.

"In addition, an agreement on the integration of oil and oil products markets is envisaged, as well as an agreement on a common electricity market," Putin told a joint news conference, without offering any more details.

As Russia's closest ally, Minsk has for decades received discounted gas from Russia even though Lukashenko has never been particularly eager to implement agreements related to the 1999 Union State treaty, which envisage a gradual economic and political merger between the two countries.

This week Putin said that the sides had agreed to focus on economic integration first, including closer alignment on taxes, labour legislation and pensions. Russia agreed to provide a new loan of $630mn to Minsk.

"We must first create an economic base, an economic foundation, in order to move forward, including on the political track," Putin said.

Although Moscow and Minsk argue from time to time about oil pricing, most of the crude supply to Belarus' 323,000 b/d Mozyr refinery comes from Russian producers. Deliveries to the country's 240,000 b/d Novopolotsk refinery have been suspended for several months because of US sanctions targeting Belarus. Russian crude supplies to Belarus almost dried up in the first quarter of last year because of a pricing dispute, which was subsequently settled.

By Oksana Yablokova