BELARUS NEWS AND ANALYSIS

DATE:

24/12/2006

Belarus delays deal with Gazprom

MINSK, Belarus (Reuters) -- Belarus has delayed the creation of a joint venture with Russian gas giant Gazprom to the first quarter of 2007, local media reported on Sunday, a move that could provoke Moscow during a bitter gas-pricing row.

Gazprom, which has become one of the Kremlin's most potent tools for projecting Russian influence at home and abroad, says it will continue to supply cheap gas to Belarus only if it can buy half of Belarus's pipeline firm Beltransgaz.

"The process of creating the joint venture will stretch over the whole of the first quarter of 2007," Belarus's Energy Minister Alexander Ozerets said, state news agencies reported.

"The valuation assessors are working and we are on the final straight. Work is going on to prepare documents on the joint venture," he said.

Officials in Moscow and Minsk, who had said the joint venture would be created by the end of this year, have been bickering over the price of the purchase, which would give Russia additional influence over Belarus's economy.

Russia says Beltransgaz is worth $3 billion to $4 billion, while Belarus says it is worth more than $5 billion.

Gazprom has said Belarus should pay $200 per 1,000 cubic meters instead of the current $47, but Russian officials have said Belarus could be allowed to pay $130-$140 if Minsk makes a deal on Beltransgaz.

Gazprom's chief spokesman, Sergei Kupriyanov, said talks were continuing with Belarus.

"There is a very intensive dialogue going on at the moment and we, of course, count on being able to make a deal," he told Russian television channel Vesti-24.

Russia cut supplies to Belarus two years ago after a gas-pricing dispute which also led to a small reduction of gas transit to neighboring 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.

That dispute prompted concerns over Europe's heavy dependence on Russia for energy supplies. EU officials admit privately there are few ways to reduce dependence on Russian gas but say Russia is also dependent on gas sales to the EU.

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 meters.

Source:

http://edition.cnn.com/2006/BUSINESS/12/24/gazprom.belarus.reut/