Belarus can only act in accordance with Russia over gas supplies in border row

Bayes Professor dismisses Belarussian threats to the European Union over migrant crisis.

Belarus has threatened to cut off EU gas supplies as a latest development in the row over escalating numbers of migrants at the Polish border. The two have been locked in an ongoing dispute, with the latest threat of sanctions from the EU said to include shutting borders to Belarus and denying individuals and entities access from the country.

In response to these reported potential sanctions, Alexander Lukashenko, the Belarussian Leader, has now threatened to shut off two key gas pipelines that run through the country and into Western Europe from Russia.

Much has been made of this threat and whether Mr Lukashenko will carry it out. Professor Michael Tamvakis, Professor of Commodity Economics and Finance at Bayes Business School (formerly Cass) says although Belarus is important for gas supplies into Europe, other transits are available and its relationship with Russia is of greater significance.

“Belarus is an important country for exported Russian gas from the West Urals to the EU, but it is by no means the only route,” Professor Tamvakis said.

“The EU is reliant on Russia and not Belarus. In 2020, around 150 billion cubic metres (bcm) of gas were exported to Europe from Russia, via pipeline. Of these flows, around 20 per cent is estimated to have passed via Belarus.

"In the same year, Russia exported a total of just under 200 bcm of gas via pipeline, so it is evident that Russia depends heavily on the EU as well for exports and I find it unlikely that Russia will want to jeopardise this long-term relationship.

“The big question is what are the alternative sources of gas for Europe. The EU imports large quantities of gas from Norway, the Netherlands and even Ukraine which has 140 bcm of transit capacity, although this is essentially Russian gas coming via a more “EU-friendly” route.

“The EU – Germany aside – also imports gas in the form of liquefied natural gas (LNG). Theoretically, the potential shortfall of the gas transiting Belarus could be covered by LNG imports. However, this may not be as easy, given that many LNG cargoes tend to be exported to Asia Pacific, which is a far bigger and more lucrative market in terms of revenues.

“Russian gas via Belarus could also be easily transported via Nord Stream 2 across the Baltic Sea, which has capacity to transport 55 bcm per annum. This means President Putin could still find a solution even if Belarus puts up resistance, proving the merit of operating multiple channel flows.

“Fundamentally, Russia wants to sell its gas at current inflated prices and will find a way of doing so with or without Belarussian intervention. How this affects costs and the price of gas is another matter.

“Natural gas is at the heart of the energy transition and has been touted as the bridge between a past reliance on coal and a future which relies largely on renewables. It is used in a number of different ways, including heating homes and generating electricity.

“While Russia could probably do without these third-party threats and counterthreats, there should be a realisation that even LNG from US shale gas does not replace the convenience and abundance of Russian pipeline gas.

“With the hostility it may attract from both the EU and Russia, Mr Lukashenko’s threats are therefore unlikely to come to fruition or prove much more than an inconvenience if they do.”

All quotes can be attributed to Professor Michael Tamvakis, Professor of Commodity Economics and Finance at Bayes Business School (formerly Cass).

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