Russia's state controlled monopoly Gazprom has agreed to supply up to 20 billion cubic metres of gas to Belarus at a preferential low price next year, despite expecting the European gas deficit and record high prices to continue through most of 2022.

The Belarus Energy Ministry said the Russian volumes will be supplied at the same fixed price as this year, about $129 per thousand cubic metres.

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As well as the Belarus deal, Gazprom also indicated it has no plans to increase deliveries to Germany via the Yamal pipeline transiting Belarus and Poland, having booked about one third of the pipeline's available capacity for December.

Gazprom has reportedly reserved just 31 million cubic metres per day of the total available volume of 89 MMcmd for the pipeline's Poland-to-Germany section.

Spot gas prices at European gas trading hubs have remained well in excess of $1000 per thousand cubic metres this week.

This in turn continues to push up prices under Gazprom’s long-term delivery contracts with customers in the region and increases its revenues from European sales.

Closer ties

Russian President Vladimir Putin’s spokesperson Dmitry Peskov acknowledged on Wednesday that the unprecedented low price for gas deliveries to Belarus next year bears “no economic expediency”, but added that the price is “the result of deepening integration” between the two countries.

Belarus leader Alexander Lukashenko has moved to strengthen political and economic ties with Russia after claiming victory in presidential elections in mid-2020, despite losing.

He has since faced increasing international isolation and sanctions and has not been acknowledged as the country’s valid president by European governments.

The favourable gas price deal also followed Lukashenko's backing of Putin’s harsh rhetoric and threats against Ukraine and Nato.

Lukashenko also suggested that his government may recognise Moscow's claim to the Crimean peninsula, which Russia annexed in 2014.

Ukraine crisis

Political observers said they expect that, with cheap gas supplies secured, Russia may now seek Lukashenko’s agreement to deploy Russian military along the Belarus-Ukraine border.

With Kiev located less than 100 kilometres from the Belarus border, such a move would be regarded as a major threat by the Ukrainian government.

Speaking in Moscow earlier this week, Putin hit out at Nato's relationship with Kiev and warned that Russia is concerned about the potential deployment of Nato warheads and military personnel in Ukraine.