24 Oct 2022 19:12

Bilateral agreements will retain priority when creating common EAEU gas market - Russian Deputy PM Overchuk

MOSCOW. Oct 24 (Interfax) - Russia is proposing to partners in the Eurasian Economic Union (EAEU) preserving bilateral agreements when forming the EAEU's common gas market amid price fluctuations on the global gas market, Russian Deputy Prime Minister Alexei Overchuk said.

"We see that the long-term intergovernmental agreements that we have in the gas sphere with member states of the EAEU allow the economies of these countries to have a competitive edge and feel comfortable and safe. We propose to our partners remaining in the agreements that we have," Overchuk told Interfax.

Bilateral agreements do not impede the conclusion of multilateral EAEU agreements on the creation of a common gas market specifying common terms for countries of the union, Overchuk said. "In addition, a draft agreement on the common gas market in the EAEU has been prepared and sent to the union's member states by the commission [Eurasian Economic Commission]. Discussions on it are underway, consultations are ongoing. We assume that the main, modern approaches to the common gas market are reflected in the draft," he said.

The terms of gas trading on the global market have changed significantly since discussion began on forming a common gas market in the EAEU, which has made long-term bilateral agreements more attractive for both consumers and suppliers, Overchuk said.

"As concerns the common gas market, when member states of the EAEU agreed to form a common gas market in the union approximately ten years ago, ideas on the market were completely different. It was thought then that competition would lead to lower gas prices, which reflected the expectations of consumers. In fact, these were the expectations. But that's theory, and in practice we see what happened with the global gas market as a result of a whole series of poor decisions adopted by governments in the West and the European Union," Overchuk said, noting that bilateral agreements are currently "what allows supporting a balance of interests, of both gas consumers and our main supplier."

"Yes, our long-term bilateral agreements will continue to have effect. There are the obligations of the parties concerned, they're clear, and in the current conditions, there are no more advantageous offers on the gas market for state consumers," Overchuk said when commenting on a question on maintaining bilateral agreements within the context of a single EAEU gas market.

One of the most discussed issues is price formation for gas transport. The common EAEU market entails the formation of a single method for forming rates in the gas transport segment within the union, although the rates for gas transport within the country and to the EAEU countries could differ, which reflects different levels of necessary investments and takes into account domestic cross-subsidies, he said.

"It's obvious that the dollar and the euro can't be used in settlements, and now we're seeing that sellers and buyers will determine the currency of payment within the framework of their agreements," Overchuk said on the currency for gas payments.

Kazakh Energy Minister Bolat Akchulakov last week spoke in favor of preserving the rights of EAEU member states to bilaterally choose the currency for gas payments, while Russia has proposed converting all payments to rubles. As reported earlier, Belarus, Armenia and Kyrgyzstan have agreed to pay for gas in rubles.