BELARUS NEWS AND ANALYSIS

DATE:

28/12/2006

Russia, Belarus in gas price war, cut-off looming

By STEVE GUTTERMAN, AP

MOSCOW -- Russia and Belarus stood their ground yesterday in a deepening dispute over natural gas prices, with Russia's state-run gas monopoly OAO Gazprom setting the clock ticking toward a Jan. 1 supply cut-off if the neighbouring country does not agree to pay more.

Belarus said a suspension of supplies could jeopardize deliveries of Russian gas across its territory to Gazprom clients in the European Union -- a threat targeting Russian concerns of a repeat of the blow its image suffered when a cut-off of deliveries to Ukraine a year ago led to supply disruptions in Europe.

Gazprom, which is demanding Belarus pay more than twice the current price for gas next year and hand over a 50 per cent stake in its gas- distribution system, refused to back down.

"If a gas supply contract for next year is not reached, Gazprom will have no grounds for deliveries of gas to Belarus as of 10 a.m. Moscow time on Jan. 1, 2007," Gazprom chief Alexei Miller said.

Miller said Gazprom would send gas for European consumers to the Russia-Belarus border in compliance with its contracts. But he also said the company sent letters to Germany, Poland and Lithuania about "the developing situation regarding gas supplies to Belarus."

About 30 per cent of Russian gas exports to Europe pass through Belarus, much of it to Germany, Poland and Lithuania.

Gazprom officials had threatened to halt supplies meant for Belarusian consumption if no contract was signed before the existing one expires Dec. 31, but Miller's comments marked the first time the company named a specific hour.

He said fresh talks yesterday failed, and blamed Belarus's "destructive position."

The remarks came after Belarusian Deputy Prime Minister Vladimir Semashko shrugged off the threat of a suspension, warning that Gazprom relies on Belarus for transit to Europe and could not risk the international criticism it faced during the Ukraine dispute.

Russia, the world's largest gas producer, provides a quarter of Europe's gas.

"I don't think Gazprom will resolve to cut off gas to Belarus," Semashko said. "They shouldn't step on the same rake twice."

Source:

http://lfpress.ca/newsstand/Business/2006/12/28/3040293-sun.html

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