BELARUS NEWS AND ANALYSIS

DATE:

20/12/2006

Russia proposes gas prices for Belarus

By YURAS KARMANAU

MINSK, Belarus

Russia has eased off on the threat of a fourfold natural gas price hike for Belarus, proposing a lesser, but still considerable increase for the ex-Soviet republic, Russia's ambassador said Wednesday.

A spokesman for Russia's state-controlled gas monopoly, OAO Gazprom, however, denied any decrease in prices and said talks were continuing.

Alexander Surikov told a news conference in Minsk that, based on a Dutch bank analysis, Russia had also increased its valuation of Belarus' state-controlled gas transport network -- which Russia is seeking a major stake in.

The ongoing struggle between Minsk and Moscow is the latest skirmish involving Russia and its efforts to hike prices for energy supplies to former Soviet republics.

Russia had proposed raising Belarus' gas prices fourfold, to US$200 (euro155) per 1,000 cubic meters -- a price Belarus' president warned would be catastrophic for the country's Soviet-style, centrally-planned economy.

Surikov said Russia was dropping its proposed price.

"The price is decreasing; it will be closer to US$140, US$130, maybe even a bit less," he said.

In exchange for easing the higher prices, Russia's state-controlled gas monopoly OAO Gazprom had proposed taking a major stake in Belarusian gas transport network, Beltransgaz -- whose pipeline network handles much of Russia's European-bound gas exports.

But the two countries had disagreed sharply on a valuation for Beltransgaz.

Surikov said an analysis conducted by ABN Amro Holdings NV valued Beltransgaz at US$3-4 billion (euro2-3 billion) -- more than Moscow's earlier valuation of US$1 billion but significantly less than Minsk's proposal of US$10-15 billion.

Belarusian First Vice Premier Vladimir Semashko confirmed that the proposed price had decreased, but refused to say by how much.

Gazprom spokesman Sergei Kuprianov told The Associated Press that the figures "don't correspond to negotiation process."

"The sides are in the process of discussing the evaluation, the details of which Gazprom is not divulging," he said.

Belarus was also rattled last week when the Russian Cabinet decided to raise customs duties on oil exports to Belarus. The increase, which Russian exporters will pass along to Belarus, would deprive Minsk of profits it has reaped by exporting oil products made of cheap Russian oil.

Surikov said Russia had offered a new proposal that would split profits from the re-export of refined oil products -- 15 percent for Belarus, 85 percent for Russia.

Belarusian Finance Minister Nikolai Korbut said Minsk's counterproposal was for a 50-50 split of profits.

Russia has recently hiked energy prices for several other ex-Soviet republics, including Georgia, Ukraine and Azerbaijan.

Moscow says the increases are intended to bring prices to competitive, world levels, but outside observers say Russia is trying to use its vast energy resources to influence the countries' internal policies -- or even punish them for crossing Moscow.

Source:

http://www.businessweek.com/ap/financialnews/D8M4OBU80.htm