BELARUS NEWS AND ANALYSIS

DATE:

29/12/2006

Belarus digs in heels in gas standoff with Moscow

MINSK (AFP)

Belarus will not allow Russian natural gas to pass through its territory to Europe from January 1 without a deal with Moscow on import prices, Belarussian Prime Minister Sergei Sidorsky said.

Ukraine, meanwhile, offered to increase transshipment of Russian gas to makeup for any shortfall if supply through Belarus to Europe is reduced or cut off.

"If the Russian monopolist is going to be unconstructive in negotiations, then naturally there will be no transit contract from January 1," Sidorsky said in comments broadcast on state television.

"Since Gazprom will not have a contract for transit, we cannot provide that service," Sidorsky said, referring to Russia's state gas monopoly Gazprom. "We cannot pump gas through Belarus without a contract."

Gazprom has threatened to cut natural gas supplies to Belarus from New Year's Day unless the country accepts a higher price for imports.

The company's vice president accused Belarus of "grotesque blackmail" for threatening to disrupt Russian natural gas deliveries and suggested Europe may face shortages, in an interview to be published Friday in a French newspaper.

If Belarus "takes part of the gas we're directing for our European clients that crosses its territory, this gas will be missing in the system," Alexander Medvedev told France's Le Figaro daily. "I therefore can't exclude a forced rationing of our offer and therefore shortages for our clients."

Belarus serves as the transit point for roughly 20 percent of Russian gas flowing to Europe, which faced similar disruptions during a pricing dispute between Moscow and Ukraine -- which accounts for the other 80 percent -- last winter.

Some five percent of Europe's total gas needs come from Russia via Belarus.

The Belarus prime minister said that "the signing of a contract on supplies with Belarus is part and parcel of allowing the Russian company to transit gas ... These issues are inter-linked."

Russian media reported earlier Thursday that Sidorsky and Russian Prime Minister Mikhail Fradkov had spoken on the phone, as officials from both sides continued talks in Moscow.

"The conditions for supplying Russian gas to Belarus have been set and will not be changed," Interfax quoted a Russian government official as saying after the talks.

In another development Thursday, Ukraine -- which found itself in much the same position vis-a-vis Moscow a year ago -- announced on Thursday its readiness to increase the transit of Russian gas through its territory in case of possible disruptions in supplies to Europe through Belarus.

"We could increase transit with the volume needed to ensure stable functioning of the economies of our European neighbours," Ukraine's Energy Minister Yury Boyko said in a statement, adding that he was "concerned" about a gas pricing crisis between the two countries.

Belarus currently pays Gazprom 46.68 dollars per 1,000 cubic metres of gas.

Gazprom originally demanded an increase to 200 dollars, which is closer to western European prices, unless Belarus agreed to sell 50 percent of its domestic pipeline operator Beltransgaz.

Gazprom has since reduced that demand to 105 dollars per 1,000 cubic metres -- 75 dollars per 1,000 cubic metres in cash payments, plus the equivalent of another 30 dollars in shares of Beltransgaz.

Source:

http://servihoo.com/Aujourdhui/kinews/afp_details.php?id=147496&CategoryID=47