BELARUS NEWS AND ANALYSIS

DATE:

07/02/2007

Belarus to Annually Lose $5 Billion from Higher Prices for Gas, Oil

Belarus' economy will lose $5 billion from the surge in gas and oil prices, Belarus' President Alexander Lukashenko told Reuters. Given that our GDP amounts to $50 billion, $5 billion is the 10 percent of the GDP withdrawn by Russia from our economy, Lukashenko said. "As to our plans for economic growth and social protection, they will be secured whatever the cost," the president vowed.

"Economically, we will withstand this situation," Lukashenko said, promising to propose to Russia to pay for all services rendered by Belarus free of charge. "They are the transit, military cooperation, Kaliningrad. A thousand and a half kilometers of the customs border, protection of our borders."

Asked to evaluate such services, Lukashenko gave the amount of at least $5 billion. "Not we offered such relations. The RF pays $4.5 billion to Poland for transit, but only $300 million to us. For gas separately, if the Polish variant is taken, we can compensate for all our losses. Tens of millions of tons of cargo move via Belarus from Europe to Russia and visa versa. It is the enormous money," Lukashenko pointed out.

"Only the people unable to count till ten can use such routes," Lukashenko commented on Transneft intention to construct an oil pipeline bypassing Belarus. "This route will cost twice as much to Russia. Second, one should take into consideration the standing of Europeans concerning flooding by oil the overloaded Baltic states. After all, it is their business, their right [Russia]."

"We have set the task," Lukashenko continued, "diversifying deliveries to Belarus. I think there will be the willing companies to deliver crude to Belarus and with which we will make private our enterprises. There will be the companies to arrive at our enterprises with their crude. But it will be the biggest danger for Russia, as it will result in the loss of Russia's traditional markets in Europe," Lukashenko warned.

On February 5, 2007, Economic Ministry of Belarus promulgated the ruling to hike by 30 percent the rates for crude transit from February 15. The current rates took effect January 1, 1996 and hadn't been revised until recently, sources with the ministry specified.

Source:

http://www.kommersant.com/p-10052/r_528/transit_energy_prices/