BELARUS NEWS AND ANALYSIS

DATE:

20/12/2006

Russia offers concessions in Belarus gas dispute

MINSK, Dec 20 (Reuters) - Russia offered concessions on Wednesday in its gas pricing stand-off with Belarus in a move that may soothe Europe's fears it could face reduced gas supplies in the middle of winter for a third year running.

Russia's ambassador in Minsk, Alexander Surikov, told reporters Moscow was ready to pay more for Belarussian gas pipelines and to continue to sell tax-free oil as part of a broader deal to secure stable gas sales at higher prices.

"Russia will cut the gas price for Belarus to $140 per 1,000 cubic metres from the earlier proposed $200 if a deal is reached with (state gas firm) Beltransgaz," Surikov told reporters.

Russia cut supplies to Belarus two years ago after a gas pricing dispute which also led to small reduction of gas transit to neighbouring Poland and Germany for a few days.

A similar dispute occurred a year ago with Ukraine but the scale of transit cuts was much bigger and prompted many EU leaders to raise concerns over the bloc's heavy dependence on Russia for energy supplies.

Ukraine's gas was cut off amid difficult political relations between the Kremlin and Kiev's pro-Western leadership, which prompted U.S. Vice President Dick Cheney to warn Moscow against using energy as a tool of intimidation and blackmail towards its smaller neighbours.

Gazprom denies any political motivation behind its moves and says it simply wants to stop losing money on sales to former Soviet Union republics and to bring prices closer to the current western European rate of around $250 per 1,000 cubic metres.

BELTRANSGAZ VALUE

Gazprom said Belarus should pay $200 instead of the current $47, but added it could sell gas cheaper if it was allowed to buy half of Belarus' pipeline firm Beltransgaz.

Gazprom and Minsk agreed to hire Dutch bank ABN Amro to price the firm as valuations ranged between as low as $600 million and as high as $17 billion.

The bank never disclosed its valuation. Gazprom said this month the two sides were far from a compromise and Minsk was very likely to have its supplies suspended from January.

The cuts started to look even more probable after Belarussian President Alexander Lukashenko's brief visit to Moscow last week saw no signs of a breakthrough despite a meeting with Russian President Vladimir Putin.

But on Wednesday, Surikov said Russia agreed Beltransgaz might be worth $3-4 billion, up from the $1 billion at which it assessed its value before.

Surikov also said that Russia may reinstate a favourable crude export duty for Belarus if Minsk agrees to give Russia 85 percent of the income it gets from selling refined products made from Russian oil.

Belarus' Finance Minister Nikolai Korbut said he believed Beltransgaz was valued at least at $5 billion by ABN Amro Bank, signalling the price gas difference between the two sides was narrowing.

Source:

http://asia.news.yahoo.com/061220/3/2uoiw.html