PREVIEW - Putin, Lukashenko To Discuss Integration, Energy Issues, Investments In Sochi On Saturday

PREVIEW - Putin, Lukashenko to Discuss Integration, Energy Issues, Investments in Sochi on Saturday

SOCHI (UrduPoint News / Sputnik - 07th December, 2019) Russian President Vladimir Putin and his Belarusian counterpart, Alexander Lukashenko, will discuss roadmaps on further integration of the two countries, oil and gas-related issues and joint investment projects during negotiations that are set to take place on December 7 in the Russian resort city of Sochi.

The last time when Russian and Belarusian presidents met was in late November during the Council of the Collective Security Treaty Organization. The upcoming meeting marks the 20th anniversary of the treaty on the creation of the Union State and follows the talks between Russian and Belarusian Prime Ministers Dmitry Medvedev and Sergei Rumas on Friday that primarily focused on the road maps on bilateral integration.

Outlining the agenda of Putin-Lukashenko talks, Kremlin spokesman Dmitry Peskov noted that the parties would address "the whole set of relations," including the oil and gas integration road maps that remain the main sticking points in the wake of absence of clarity over price of Russian gas for Belarus and losses for Minsk as a result of Moscow's oil tax maneuver.

INTEGRATION DESPITE DISAGREEMENTS

Moscow and Minsk signed a treaty establishing the Union State of Russia and Belarus in 1999 with a view to ensuring greater social, economic and political integration between the two countries.

In September, Medvedev and Rumas initiated a draft joint program of action that launched the work for 31 road maps in various areas of cooperation. In November, Rumas stated that Russia and Belarus had drafted at least 20 integration initiatives for signing. Lukashenko then proposed to adopt the program of integration by December 8, the Union State's anniversary.

Russia's Kommersant newspaper reported, citing sources, that the joint program of integration envisaged creation of a common tax and customs system as well as common energy market by 2021, with other areas of integration set to include banking supervision and Currency control.

Meanwhile, speaking about the progress on coordinating the road maps in November, Rumas pointed out that Russia and Belarus had not yet coordinated their oil and gas integration schemes due to controversies between the two parties, but pledged that "there are no unmanageable matters" and a consensus would be reached.

Medvedev, in turn, said during his annual press conference that Russia and Belarus had a very high level of integration in their Union State despite the disputes that sometimes arose.

"We have a Union State, this is a great value. We often argue with each other, express some offenses, this especially happens in emotional outbursts. But objectively, the level of integration between our countries is very high," Medvedev said.

Russia's so-called tax maneuver is at the center of the two countries' energy controversies.

Russia plans to gradually lift the export duty on oil and increase the severance tax by 2024. As a result of the maneuver, Belarus will have to bear additional costs, which Minsk estimates at about $400 million in 2019 alone and at $11 billion over the whole period.

According to Minsk, the maneuver will also hinder the competitiveness of Belarusian oil producers, as oil prices for country's refineries in 2020 will increase by $17.7 per tonne due to the Moscow's move. However, Moscow insists that Russia is not liable to Belarus for the "so-called losses" of its budget, as they lie beyond Russia's existing obligations to the republic.

In September, Lukashenko said that while approving the joint action on the Union State integration in December, the parties would have to return to the issue of cost compensation to the Belarusian side in connection with the oil tax maneuver.

The tax maneuver dispute is complemented by the still unresolved issue of compensation to Belarus over contaminated oil delivered by Russia through the Druzhba pipeline in April. Russia pledged to reimburse the losses to Belarus with state-owned transport monopoly Transneft saying that the reimbursement could drag on until mid-2020.

Meanwhile, Lukashenko said that Minsk and Moscow still had not agreed on the compensation over contaminated oil, and Rumas stressed that Minsk expected clarity on the issue from the Russian side by the end of 2019.

Moscow and Minsk have not yet agreed on a price of Russian gas for Belarus. The current agreement, under which Belarus purchases Russian gas at $127 for 1,000 cubic meters (35,314 cubic feet), expires this year. Lukashenko said that it would be reasonable to bring the price down to a level that would be close to Russia's domestic level, but it is still unclear whether Moscow would go for reducing prices.

THE MOST AMBITIOUS INVESTMENT PROJECT

The largest Russia-Belarus investment project, the construction of the Belarusian Nuclear Power Plant (NPP), will also unlikely be left behind during the talks.

The NPP is being built near the town of Astravets in the Grodno region. The plant's general contractor is Atomstroyexport, the subsidiary of Russia's Rosatom. The nuclear power plant will consist of two power units with a total capacity of up to 2,400 megawatts. The plant is designed to comply with the most modern, so-called "post-Fukusima" safety standards.

However, the plant's construction is opposed by Lithuania, which views the project as a "threat to national security," despite guarantees that the plant will meet the highest safety standards. In May, Vilnius appealed to the International Atomic Energy Agency in an attempt to prevent Belarus from launching the power plant until all security issues were resolved.