BELARUS NEWS AND ANALYSIS

DATE:

25/07/2007

Factbox-Belarus' energy relationship with Russia

July 25 (Reuters) - Belarus this week asked Russia for more time to pay a $500 million gas bill after missing a deadline to settle debts run up since Gazprom more than doubled the cost of its gas supplies at the start of the year.

Belarus is totally dependent on Russia for oil and gas and is a vital energy link between Russia and western Europe.

It had remained closer to Russia than any other former Soviet republic, but relations have deteriorated since a series of pricing disputes.

The sharp increase in the price it pays Russia for its gas has had a severe impact on its economy, Belarus has said.

For its part, Russia has been battling to reduce subsidies to former Soviet republics through which its energy exports are routed.

President Vladimir Putin has compared transit countries to "parasites on Russia" and has been attempting to cut what he sees as transit risks.

Below are a series of facts outlining the energy relationship of Belarus and Russia.

OIL ROW

During a pricing dispute with Russia in January, oil shipments through the Druzhba pipeline, which runs through Belarus, were halted for three days.

The Druzhba -- or Friendship -- pipeline supplies Europe with a 10th of its oil.

Flows through the Druzhba pipeline resumed after Belarus dropped an oil transit duty it had imposed and agreed to return oil Moscow said it had taken illegally.

GAS ROW

Belarus is also the transit route for gas to Europe, which relies on Russia for around a quarter of its gas needs.

At the start of this year, Belarus agreed to pay $100 per 1,000 cubic metres of natural gas, up from $46. Even with the price increase, Belarus still had the cheapest deal of any ex-Soviet republic.

At the same time, Gazprom agreed to almost double gas transit payments to Belarus. The fee was raised to $1.45 for every 1,000 cubic metres of gas pumped 100 kilometres (62 miles), up from 75 cents.

The two sides also agreed Gazprom would pay $2.5 billion to buy 50 percent of state-run Belarussian firm Beltransgas, which controls the country's local pipeline network.

Russia's gas monopoly Gazprom already owned all of Belarus' transit pipelines, through which Gazprom ships around 20 percent of the gas it supplies to Europe. The rest is shipped via Ukraine.

Source:

http://asia.news.yahoo.com/070725/3/35bxi.html