BELARUS NEWS AND ANALYSIS

DATE:

02/01/2007

Last-Gasp Gas

BBC Monitoring

Belarus signs a last-minute deal to buy Russian gas at a higher price.

[TOL note: Belarusian Prime Minister Syarhey Sidorski let the strain show during his side's last-minute meetings with the Russian state-controlled gas supplier Gazprom on New Year's Eve. He can hardly have forgotten what happened a year earlier, when Moscow shut off the gas flow to Ukraine in a price dispute, nearly setting off an energy emergency across Europe, or the two unexplained explosions that cut the gas pipeline from Russia to Georgia last January, leaving thousands of Georgians shivering for days in unheated buildings.

At the stroke of midnight, though, the two sides agreed a deal that will see Minsk pay much more for gas but allows it to sell half of the state-owned Beltranshaz distribution network to Gazprom for $2.5 billion. Sidorski did not look pleased when the deal was signed, according to Russian media monitored by the BBC. Mayak Radio quoted him as saying, "We have agreed to and signed conditions for gas supplies which are not in the interests of Belarus."

Sidorski was "visibly upset" at the news conference to announce the deal, Ekho Moskvy radio reported. "This price is very difficult, or I may even say too burdensome. ... [We] will have to deny ourselves everything. If we will not be able to cope with the payments, we will ask our partners in Gazprom for some deferments or credit," he said.]

RUSSIA, BELARUS OFFICIALS DETAIL NEW GAS DEAL

Excerpt from report by Russian Channel One Europe TV on 1 January:

[Presenter] Journalists' attention focused on another area in Moscow: the main intrigue of the recent couple of days had its cinematographic happy end in Gazprom's office in Nametkina Ulitsa [street] with regard to possible discontinuation of Russian gas delivery [to Belarus] in the new year. The long-awaited happy end took place at the very end of 2006. The new long-term agreement was signed two minutes before midnight when most people in both countries were already celebrating at their festive tables. The contract envisages the fuel price formula which is in use in Europe. Our correspondent Ilya Kostin was in the office of Gazprom on New Year's Eve.

[Correspondent] They made it at the last moment. [Passage omitted]

When Aleksey Miller, the head of Gazprom, and Syarhey Sidorski, the Belarusian prime minister, arrived in front of the journalists, the first question was of course about the price.

[Aleksey Miller] In line with the conditions of our agreement, the price of Russian gas for Belarus in 2007 will be $100 [for 1,000 cubic meters] which will be paid for with money and later on it will be calculated on the basis of the price formula which we use in our contracts for delivering gas to European countries. The conditions in the contract that has been signed are the most privileged and advantageous on the territory of the former USSR.

[Correspondent] The sides have also agreed that the Russian concern will buy half of the Belarusian Beltranshaz concern at a price set by independent experts.

[Syarhey Sidorski] Five billion dollars is the current price offered for Beltranshaz. We have agreed that 50 percent of the shares will be passed on to Gazprom within four years. During these four years Gazprom will be paying the Belarusian side half of the price of Beltranshaz shares in equal installments.

[Correspondent] As far as the price for transporting the gas is concerned, the initiative to make it comply with market demands came from the Russian side.

[Miller] The transit rate has been increased. Until now it stood at $0.75 for 1,000 cubic meters for 100 kilometers, but now the transit rate for the Beltranshaz network has been increased up to $1.45 and fixed for five years.

[Correspondent] Having signed the agreement with Belarus Gazprom has finalized its agreement base for the new year. Earlier similar contracts were signed with Ukraine, Azerbaijan, Armenia, Georgia, and Moldova. Judging by the volume of the current contracts the gas market is growing, and now there are no doubts over the stability of this market.

BELARUS AGREED TO HIGH PRICE TO SHOW EUROPE IT IS RELIABLE PARTNER: PREMIER

Excerpt from report by Russian external TV service NTV Mir on 1 January:

[Presenter] Two minutes before the new year Gazprom and Belarus signed a contract for the supply and transit of gas for the next five years. [Passage omitted] Dmitriy Novikov has the details.

[Correspondent] One can only guess how tense the negotiations were. All evening yesterday reports coming in from Gazprom's negotiations room were not comforting. With just hours to go before midnight, journalists were told that most likely gas supplies would be discontinued because the Belarusian side was linking the signing of the contract with issues, I quote, that have nothing to do with gas.

They say that in the last two hours before the new year the Belarusian prime minister [Syarhey Sidorski] often left the negotiations room to telephone Minsk, coming back looking very gloomy.

The treaty on the supplies and transit of Russian gas was signed in the last few minutes of the outgoing year, at 23:58 hours. At a news conference, Gazprom head Aleksey Miller thanked the Belarusian counterparts following a constructive and businesslike dialogue.

[Miller] Of course issues concerning medium-term cooperation, issues concerning our cooperation in the gas sphere are issues that are the basis of economic development and of our cooperation, cooperation between Russia and Belarus, between Gazprom and Beltranshaz.

[Correspondent] At the news conference it emerged that the Belarusian prime minister, while in the Gazprom office, was constantly in touch with the [Belarusian] Security Council and his government: an emergency meeting was convened in Minsk. According to him, agreement on the details of the accord was reached with extreme difficulty, cent by cent, compromise by compromise.

[Sidorski] We promised to take a well-considered decision that will ensure our partners in Europe that Belarus is a reliable partner. The Security Council of our country and the government - we took this decision together - we are accepting these 100 dollars, this very difficult price for Belarus, and we shall be dealing with problems in our country on our own.

[Correspondent] The parties signed the agreement which regulates the supply and transit of Russian gas until 2011. The result of the talks, according to Aleksey Miller, is that Minsk has been granted the most favorable conditions, $100 dollars per 1,000 cubic meters. The important thing is that in the future there will be a gradual transition of the price for Belarus to the European market formula. In 2008, this will mean 67 percent of the price on the European market, excluding transport expenses, in 2009 80 percent, in 2010 90 percent and then, starting in 2011, as a result of last night's talks Minsk agreed to buy gas from Russia at European prices.

Sources: Channel One Worldwide (for Europe), Moscow, in Russian 0900 gmt 1 Jan 07;

NTV Mir, Moscow, in Russian 1300 gmt 1 Jan 07

Source:

http://www.tol.cz/look/TOL/article.tpl?IdLanguage=1&IdPublication=4&NrIssue=199&NrSection=1&NrArticle=18014