BELARUS NEWS AND ANALYSIS

DATE:

29/08/2006

Cost evaluation of Beltransgaz set for October

MOSCOW, August 29 (RIA Novosti) - Belarus plans to evaluate the cost of its leading pipeline company, Beltransgaz, which is being sought by Russia's state-run energy giant Gazprom, in October, the country's first deputy prime minister said Tuesday.

Gazprom, which supplies roughly one quarter of Europe's gas demand, is seeking a 50% stake in Beltransgaz, which owns natural gas pipelines leading to Europe. Gazprom suggested earlier that a new price for gas supplied to Belarus would be finalized depending on the Belarusian offer for Beltransgaz or the Mozyr oil refinery.

Vladimir Semashko said Dutch bank ABN Amro, which was appointed the evaluator, would set the minimum and maximum price for Beltransgaz, with the final price to be set within that range.

"First, the minimum and maximum price will be determined [by ABN Amro], and then a seller and a customer will discuss the [final] price," Semashko said. "Relevant documents will be prepared only after a compromise is reached."

After raising gas prices for several of its other ex-Soviet neighbors, Gazprom said it will also pursue a European price formula for Belarus as of 2007, and offered to partially compensate it for the price hikes if Beltransgaz sold its main gas routes to the Russian energy giant.

The price of gas supplies to Belarus has not changed since 2004, and currently stands at $46.68 per 1,000 cubic meters. Russia is seeking a price in the region of $180-200.

Gazprom deputy board chairman Alexander Ryazanov said in June the company raised the price from the current $46.68 to $200 per 1,000 cubic meters in its latest draft agreements sent to Belarus for consideration, a move expected to cost the Belarusian budget around $2 billion.

Ryazanov said Belarus was ready to discuss with Gazprom a stake in Belarusian assets in exchange for preferential prices. He said any agreement on a cost assessment mechanism should involve reliable international companies.

"It will not be easy to reach an agreement. For some reason they think that the current price is actually a market price. But we are seeking a compromise. The Belarusian side could offer us some assets, for example Beltransgaz or Mozyr oil refinery," he said.

In his response to a parliamentary inquiry into the reason for a price rise for Belarus, Andrei Dementyev, Russia's deputy industry and energy minister, said in mid-August that the current price of $46.68 only partially covered the cost of extracting, storing and transporting gas to Belarus.

"Under these conditions, keeping the current gas price means not only directly subsidizing supplies to Belarus, but also depriving us of a source of investment into the development of the gas industry," he said.

Source:

http://en.rian.ru/business/20060829/53294956.html

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