BELARUS NEWS AND ANALYSIS

DATE:

07/11/2006

Ambassador Threatens Minsk With Gas Price

MINSK -- The government may raise gas prices for Belarus fourfold unless Moscow gets some control of gas pipelines, Russia's ambassador in Minsk said Friday.

Such an increase could virtually destroy the Belarussian economy.

Ambassador Alexander Surikov told reporters that Russia could raise gas prices for Belarus to $200 per 1,000 cubic meters from about $47 at the moment unless a deal allowing some degree of control over pipelines that carry gas to Russia's customers in Poland and Germany is reached.

Surikov also said Russia might cut oil supplies to Belarus significantly next year if the two sides fail to agree to unify duties on oil products refined at Belarussian refineries.

Surikov said Russia wanted Belarus to raise the duties to the Russian level of $180 from current $57. Moscow also wants Belarus to transfer up to 85 percent of the amount raised from the new oil products duties to Russian state budget.

"A process of signing the balance for next year is suspended because Russia wants to discuss a question of sharing export duties," he said.

Belarus will receive 19.75 million tons of crude oil this year and wanted to ask to raise supplies next year to 21.5 million tons. Experts said Belarus received about $3.7 billion in hard currency earnings from exporting oil products refined from the Russian crude.

The standoff over gas prices has caused alarm in Europe, which gets about a quarter of its gas from Russia, and 20 percent of those Russian supplies are pumped via Belarus into Germany and Poland.

Belarussian President Alexander Lukashenko has repeatedly defended low gas prices for Belarus, saying otherwise he might sever all relations with Russia.

Source:

http://www.themoscowtimes.com/stories/2006/11/07/042.html