BELARUS NEWS AND ANALYSIS

DATE:

17/12/2006

Russia rebuffs Belarus on gas prices-newspaper

By Richard Balmforth

MOSCOW, Dec 17 (Reuters) - Russia has rebuffed attempts by Belarus President Alexander Lukashenko to secure lower prices for Russian natural gas imports and to cut oil export duties, a respected Russian newspaper said.

No official account has yet emerged of a three-hour meeting in Moscow last Friday between Lukashenko and Russian President Vladimir Putin aimed at ending a row over gas between the once-close, ex-Soviet allies.

But Andrei Kolesnikov, the well-connected Kremlin correspondent of the daily Kommersant, said Lukashenko flew back home empty-handed having failed "to drag Russian-Belarus relations out of the dark abyss".

He returned to Minsk, skipping a Kremlin dinner and a planned trip to an ice-hockey match.

Lukashenko, once a close ally of the Kremlin, has been infuriated by demands from Russia's giant Gazprom (GAZPq.L: Quote, Profile , Research) that Belarus hand over control of its gas pipeline network, including a transit pipeline to Europe, or face high gas prices of $200 per thousand cubic metres from next year.

Belarus, to the west of Russia and bordering three European Union members, has so far resisted Moscow's pressure.

Lukashenko, for political reasons, had attempted to portray the talks as successful, Kolesnikov said.

"The president of Belarus did not succeed in cutting the price of Russian gas that goes to Belarus by one cent. It will cost $200 per thousand cubic metres," he wrote.

"As well as that, all his other negotiating positions were met with refusal," Kolesnikov added.

Lukashenko, shunned in the West for his heavy-handed treatment of dissent at home, has in the past found a sponsor and ally in the Kremlin and there is still talk of a "union state" between the two countries.

But, as tensions have sprung up over Russian energy supplies, the Kremlin has begun to hold him more at a distance.

PIPELINE OWNERSHIP

Gazprom sells about 22 billion cubic metres (bcm) of gas to Belarus every year and ships another 30 bcm, mainly to Germany and Poland, across its territory.

Belarus pays some $47 per 1,000 cubic meters for its gas, while Gazprom says concessions on pipeline ownership would cut the $200 price demanded.

Other ex-Soviet republics, including Azerbaijan and Georgia, have also been told by the Russian gas monopoly that they will have to bring the price they pay for Russian gas nearer to European prices, which means doubling or even quadrupling prices for fuel.

Belarus has accused Moscow of violating an agreement on unifying their states by saying it would impose full duties on oil exports to Belarus.

But even here Lukashenko had failed to win any concessions, Kolesnikov said. "Export duties on Russian oil for Belarus will not be changed and not be reduced," Kolesnikov wrote. "It took two or three hours to convince Alexander Lukashenko of that." (Additional reporting by Guy Faulconbridge)

Source:

http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2006-12-17T130006Z_01_L17873435_RTRIDST_0_RUSSIA-BELARUS-GAS-PICTURE.XML&rpc=66&type=qcna