BELARUS NEWS AND ANALYSIS

DATE:

03/08/2007

Gazprom hope for Belarus gas deal

Gazprom, Russia's state-owned gas monopoly, has said it hopes to maintain supplies to Belarus after a spat between the countries appeared to calm.

Gazprom had threatened to halve supplies to the former Soviet republic, saying it had run up a $456m (?225m) bill for previous shipments.

But on Thursday, Belarus' president said that the bill would be paid.

The incident is a repeat of supply disputes with ex-Soviet republics seen in 2005 and 2006.

A delegation from Belarus is in Moscow to try to reach an agreement, with a deadline of 1000 (0600 GMT) on Friday, after which time Russia has threatened to cut supplies of gas by almost a half.

'Live in peace'

Belarus had previously said it needed more time to pay, blaming Gazprom's doubling of the price it charged for the gas earlier in the year.

Under a deal agreed at the start of year, Russia increased the price per 1,000 cubic metres of gas from $46 to $100.

The price for the first half of 2007 was set at $55, but Belarus was required to pay debts of $456m to Gazprom by 23 July.

Belarussian President Alexander Lukashenko said on Thursday that the payment would be made.

"I gave the order for the money to be taken from our reserves and for the payment of $460m to be made," he said.

"Let them live in peace."

He said that Russia had offered Belarus a loan to pay the debt, at an interest rate of 8.5%.

"It's getting humiliating," the president said. "We can get a loan like that from any country."

Moscow denies accusations that it uses gas supplies to bully its neighbours.

Instead, it insists that price rises last year for Belarus, Ukraine and Georgia merely reflect the end of Soviet-era subsidies.

Like Belarus, Ukraine was forced to start paying more for its Russian gas in 2006, but not before Gazprom reduced its supplies, leading to a knock-on reduction in gas passing through the country to western Europe.

This dispute sparked concern within European Union nations about their energy security and the future reliably of Russian gas, which now accounts for much of European requirements.

There are fears that if Russia does cut gas to Belarus, Minsk may start to siphon off gas from transit pipelines which carry 20% of Russia's exports to western Europe.

Source:

http://news.bbc.co.uk/1/hi/business/6928304.stm