BELARUS NEWS AND ANALYSIS

DATE:

07/07/2006

Minsk Mulls JV With Gazprom

Reuters

Belarus, anxious to avoid paying the big price increases threatened by Gazprom, on Thursday proposed a joint venture to run its pipelines with the gas giant as a compromise to demands it yield control of the network.

Belarus officials said they were prepared to create the venture with the Russian gas export monopoly by the end of the year and would accept an independent valuation of the assets, which Russia says are worth much less than Belarus estimates.

Gazprom has threatened to quadruple gas prices for Belarus from next year unless Minsk cedes control of the pipelines.

Minsk has repeatedly rebuffed the suggestion but fears the damage that the gas price hike would do to its Soviet-style command economy.

Last month, the Belarussian government and Gazprom agreed to pick Dutch bank ABN AMRO to value the assets.

The valuation would start next week, Vladimir Semashko, first deputy prime minister, was quoted as saying by BelTA news agency.

"We are ready to create a gas transport joint venture by the end of this year. But we first need to see the market value of Beltransgas," he told BelTA.

"The Belarussian side will agree with experts' valuations. We will build our talks on this."

Belarus said its state company Beltransgas, which manages the pipelines, cost about $5 billion while Gazprom puts the price at about $500 million.

Gazprom wants to raise prices for Belarus to $200 per 1,000 cubic meters from 2007 from about $47 now.

Russia supplies Belarus with around 22 billion cubic meters a year and sends around 30 bcm via the country to Europe, mainly to Poland and Germany.

The Russian company supplies larger gas volumes to Europe via neighboring Ukraine, which also has a pricing dispute with Gazprom.

Gazprom said on Thursday Ukraine had proposed returning to an earlier discussion about creating an international consortium to manage Russian gas exports to its ex-Soviet neighbor.

"After a proposal from the Ukrainian side, the question of the continued work of the International Consortium of Management and Development of Ukraine's Gas Transport System has been discussed," Gazprom said in a statement.

"A decision to hold a meeting of consortium participants has been taken," Gazprom said.

Under a Russian proposal, previously dismissed by the Ukrainians, Gazprom would have a stake in the consortium which would control some of Ukraine's gas transport assets.

Source:

http://www.themoscowtimes.com/stories/2006/07/07/043.html

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