BELARUS NEWS AND ANALYSIS

DATE:

26/12/2006

Russia, Belarus in talks on gas sales

By STEVE GUTTERMAN

Talks on Tuesday between Belarusian authorities and the Russian state gas monopoly Gazprom led to no agreement on gas prices, the company said, raising the possibility that supplies to the ex-Soviet republic could be suspended in the New Year.

Gazprom wants to raise the price the neighboring country pays and has suggested it could halt deliveries unless an agreement is reached by Jan. 1, when the current contract runs out.

The monthslong price dispute has raised the specter of a repeat of the suspension of gas supplies to Ukraine at this time last year and has strained relations between Russia and Belarus, which have the closest ties of any two ex-Soviet republics.

Meanwhile, Moldova has agreed to pay 6.3 percent more for Russian natural gas, an official with Russia's state gas monopoly said Tuesday.

OAO Gazprom spokesman Sergei Kupriyanov said Moldova has agreed to pay $170 per 1,000 cubic meters, up from $160 it pays now, the Interfax news agency reported.

Moldova's President Vladimir Voronin has accused Russia of using its gas monopoly to punish former Soviet countries like itself, Georgia and Ukraine, which have moved to establish closer ties to the West.

In Belarus, with time ticking away, Gazprom spokesman Sergei Kupriyanov said no agreement was reached in talks in Moscow led by company head Alexei Miller and Belarusian Deputy Prime Minister Vladimir Semashko.

He said there was still time to reach an agreement, but added that the outcome of Tuesday's talks was "quite alarming" -- suggesting the positions of the two sides are far from agreement.

Gazprom, which had been asking for $200 per 1,000 cubic meters, has offered to reduce that to $110, of which Belarus would pay $80 in cash and the rest by handing over 50 percent of its state-controlled gas transport network, he told The Associated Press.

The shares in the pipeline network, Beltransgaz, would help pay for supplies through 2010, he said. Belarus wants to continue paying roughly the amount it is paying now, about $47, he said.

In the latest hint of a possible supply cutoff, Gazprom chief Alexei Miller said in televised comments that "the responsibility for the situation ... lies entirely with the Belarusian side."

In an effort to stress that Gazprom was compromising, Miller said it had agreed to a valuation of $5 billion for the Belarusian network's operator, Beltransgaz, even though it believes the company is worth no more than $3.3 billion.

Georgia, whose Western-leaning leadership has accused Russia of using its energy might to apply political pressure on it, agreed Friday to pay $235 per 1,000 cubic meters for its Russian gas imports under threat of a gas freeze on New Year's day.

Source:

http://www.businessweek.com/ap/financialnews/D8M8I12O0.htm