BELARUS NEWS AND ANALYSIS

DATE:

30/05/2006

Report: Russia Seeks to Raise Gas Price

c 2006 The Associated Press

MOSCOW - Russia is seeking a fourfold increase in the amount Belarus pays for Russian natural gas, a newspaper reported Tuesday, in what is apparently the latest attempt by Russia's state-controlled gas monopoly to secure control of Belarus' pipelines.

The Kommersant newspaper, citing an unnamed OAO Gazprom official, reported that chief executive Alexei Miller would discuss gas prices at a meeting in Moscow on Wednesday with Belarus Energy Minister Alexander Ozerets and the head of pipeline operator Beltransgaz, Dmitry Kazakov.

Gazprom officials could not be immediately reached for comment.

After raising the price for other former Soviet republics, Gazprom announced in March that Belarus _ a stalwart Russian ally _ should pay market rates and proposed a US$100 per thousand cubic meter price hike to US$147 (euro115). Gazprom later raised its demand to US$200 (euro157), Kommersant reported.

The paper reported that Gazprom is frustrated in its efforts to secure control of the Belarus pipeline system, one of the main routes for Russian gas headed to lucrative European markets.

Analysts in Belarus have said the proposed hike would cripple Belarus since its Soviet-style command economy relies on cheap Russian gas to keep exports competitive.

The dispute has also put strains on a union treaty signed in 1996 that envisaged close political, economic and military ties between Russia and Belarus but stopped short of creating a single state. Moscow, meanwhile, has become increasingly impatient about subsidizing Belarus' economy.

Late last year, Russia re-negotiated natural gas contracts with several former Soviet republics, bringing them closer to European prices, which have soared in line with record oil prices. Russia's move to sharply increase gas prices for Ukraine in January was widely seen as politically motivated pressure on Ukraine's new, Western-leaning government ahead of March parliamentary elections.

The spat ended in a doubling of the price, and appeared to have hampered the performance of Western-leaning President Viktor Yushchenko's party, which came third.

Source:

http://www.chron.com/disp/story.mpl/ap/fn/3914142.html