Belarus is highly dependent on energy imports from Russia, primarily oil and natural gas. To understand how the energy system would function in the event of a supply disruption, a comprehensive analysis of technical and economic indicators was conducted.
Today, European countries have sufficient spare capacity to receive LNG. This capacity is sufficient to provide Belarus with the necessary volumes of gas. In the event of a termination of supplies, gas reserves in underground storage facilities could be used at the first stage. This would ensure the supply of electricity and heat to all consumers without serious interruptions until alternative supplies are organized. Oil reserves will make it possible to partially reduce natural gas consumption at power plants.
Domestic oil production will be sufficient to meet a quarter of total domestic demand for petroleum products. The rest can be supplied via Poland and Lithuania. Reserves of oil and petroleum products will ensure supply while alternative routes are being organized. At the same time, at the first stage, it is necessary to suspend the export of petroleum products until the volume of the reserves of oil and petroleum products is restored and the economic feasibility of additional supplies for the production of petroleum products for export becomes clear.
Economic calculations show that gas for consumers today does not cover all the costs of its purchase and transportation. The transition to supplies from Europe will lead to a significant increase in prices: on average, they will rise 3.3 times for the end consumer – from $153 to $504 per thousand cubic meters. This means that even if supplies are technically possible, the cost of gas will become a significant burden on the budgets of both enterprises and the population. To maintain current tariffs, the state will have to spend about $5 billion a year.
Meanwhile, supplies of oil and petroleum products to the domestic market will be less sensitive to prices. The cost of petroleum products will remain virtually the same, and the increase in gasoline or diesel fuel prices will be only 2.5-7%. This will not come as a shock to the energy sector or the population. However, the losses from exports could be significant: about $4 billion in exports that previously were profitable will be lost.
Electricity will also be affected by rising gas prices, but the effect here is less direct. With gas prices rising 3.3 times, the cost of electricity for the end consumer will increase by only 33%, from $0.099 to $0.132 per kWh. This is because the share of nuclear energy in production is quite high, and its cost remains unchanged. Condensing power plants are becoming more expensive, while CHP plants are leveling out in price with nuclear power plants. A significant part of the cost of electricity for the end consumer is also made up of the costs of operating networks and energy distribution. These costs are also independent of gas prices.
The situation with thermal energy is even more complicated. The cost per gigacalorie will increase from $44.6 to $101.4, which is 2.3 times higher. For the population, which currently pays only about 20% of the real cost, this means that if the current tariffs remain unchanged, compensation will already amount to 91% of the costs. Achieving full payback will require a 10-13-fold increase in tariffs.
The results of the calculations show that, technically, the system can switch to alternative supplies without any serious problems in the event of a cessation of oil and gas supplies. All consumers will be provided with energy. Moreover, this will not have a significant impact on transport fuel prices and electricity tariffs. However, the economic burden will be very high: rising gas and heat prices will affect organizations and the population significantly, and the loss of export revenues will reduce foreign currency inflows into the country.
This emphasizes the need for:
- the revision of tariffs and the subsidy system;
- the creation of reliable alternative energy sources;
- the development of domestic energy production and the use of local resources.
The full report on the functioning of Belarus’s energy system in the event of termination of oil and gas supplies from Russia is available to read or download at the link (Russian).
Материал доступен на русском языке: Функционирование энергосистемы Беларуси в случае прекращения поставок нефти и газа из России
