BELARUS NEWS AND ANALYSIS

DATE:

26/12/2006

Gazprom Warns Belarus of Gas Cuts if Price Hike Not Accepted

MosNews

Russia's state-controlled gas monopoly Gazprom has announced a price hike of some $30 for neighboring Belarus and threatened to cut the gas supplies starting on Jan. 1, if the hike is not accepted.

Belarus currently buys Russian gas for the same price as it is sold in the neighboring Smolensk region and that equals $46 for 1,000 cubic meters. This price is below the self-cost of Gazprom's gas production and the Russian monopoly has announced a price hike. It first demanded that Belarus pay $200 per 1,000 cubic meters, more than fourfold increase over the current price.

Late on Monday, Dec. 25, Gazprom's press secretary Sergei Kupriyanov had said that Gazprom would agree to a lower price of $80 per 1,000 cubic meters if Belarus handed over 50 percent of its state-controlled gas transport network.

Nonetheless, the Belarusian leader Alexander Lukashenka insists on maintaining subsidized prices next year.

Gazprom's press secretary was quoted by the Interfax agency as saying: "The position which they have adopted today is absolutely irresponsible and threatens Belarus' energy supplies. The current contract for gas deliveries to Belarus expires in six days."

In January 2006 the cutoff of Russian gas supplies to Ukraine - the major transit route for Russia's natural gas exports to Europe - also disrupted deliveries to several European countries. This provoked major concern about Europe's reliance on Russian gas, which provides a quarter of European consumption.

A fresh energy dispute involving Belarus would heighten the EU's doubts about the reliability of Russia as an energy supplier.

Source:

http://www.mosnews.com/money/2006/12/26/belarusgas.shtml

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