Counterspin: High Gas Import Prices Are Not Related To Government Negotiating Capabilities
The claim of VMRO-DPMNE that the Government did not provide low gas prices, unlike “all governments in the region and the world” is a spin. The price of imported natural gas depends very little on the government’s negotiating capabilities
Author: Goran Lefkov
The political party VMRO-DPMNE in a statement published on their official website on 13 January 2022 claims that the Government has failed to obtain cheaper gas for the citizens of North Macedonia.
Spin: If the government of Zaev and the pawn Kovacevski had tried to provide cheap gas from the international market like all governments in the region and the world, Macedonian companies and citizens would not be paying for the most expensive gas now. Citizens are now paying more for heating because the government did not provide low gas prices when other governments did.
[Source: VMRO-DPMNE website, date: 13 January 2022]
Counterspin: This claim is а spin for two reasons:
The first reason is that the gas in N. Macedonia arrives from Russia. The state has no alternative access to a pipeline. The entire gas in the country flows through the pipeline from Kriva Palanka, which has a capacity of 800 million cubic meters of gas per year. The country is 100 percent dependent on Russian gas. A small part of the stream utility company “Strumica Gas” has the opportunity to bring trucks from Petrič, but it is also Russian gas.
The Russian Federation uses gas as a means of diplomatic pressure on Euro-Atlantic countries. The European Commission, in its study “Energy as a tool of foreign policy of authoritarian states, in particular, Russia”, argues that Russia uses energy resources to protect and promote interests and to extend its geopolitical influence to other countries. N. Macedonia is a particularly suitable country for Russia to practice high gas prices for several reasons.
One of them is due to the strong Euro-Atlantic commitment of the citizens because of which the country is already a member of NATO and a candidate country for EU membership. In this situation, the Macedonian side does not have much room for maneuver in negotiating the gas price with Russia.
The second reason for the high price of Russian gas in North Macedonia is its low use.
According to the latest annual report of the Energy Regulatory Commission for 2020 on page 92 it is announced that 338 million cubic meters of gas have been transferred to the country. At the same time, Germany consumed 120 billion cubic meters of gas, Turkey about 60 billion cubic meters of gas and Serbia 2 billion cubic meters of gas. Germany consumes 1,450 cubic meters of gas per capita, Turkey 731, Serbia 280, while N. Macedonia consumes 180 cubic meters of gas per capita per year.
Another additional reason is that the pipeline ends in N. Macedonia has no extension to Kosovo and Albania, for example, so the country is not in a position to transit gas through it and to have a better negotiating position with the Russian state monopoly on gas exports “Gazprom”.
Unlike Serbia, where “Gazprom” is the majority owner of the Serbian Oil Industry and “Serbia Gas”, the owners of the gas companies in the country are the state and “Makpetrol”. That is why Serbia, after Belarus, has the lowest gas price in Europe.
Although the price of gas, which has been agreed with the Russian partners, is secret, still for N. Macedonia, that price has always been 5 to 10 times more expensive than Belarus or formerly Ukraine. In 2009, the price for North Macedonia was about $ 400 per 1,000 cubic meters of gas, while in Ukraine it was only $ 40.
The statement of VMRO-DPMNE has another error: “That difference of at least 500 Euros per cubic meter of gas, if negotiated in time would not have been at the expense of the people and the budget.” The prices agreed by the states are expressed in 1,000 cubic meters of gas, and not as claimed in the statement of VMRO-DPMNE “at least 500 Euros per cubic meter.” The price of 500 Euros refers to 1,000 cubic meters, not 1 cubic meter.
Having in mind all of the above, we assess the statement that the Government with its inability to procure cheap gas for the citizens as a spin, because although formally and legally the Government agrees on the price of gas with the Russians, its role and impact on the price, for the above reasons is very small. It is much more an attempt to influence the Russian side on the geopolitical situation in the region, than real economic negotiations through which the Macedonian side would have some influence on the price.