BELARUS NEWS AND ANALYSIS

DATE:

30/12/2006

Belarus Announces Deal on Gas Price

By YURAS KARMANAU Associated Press Writer

The Associated Press

MINSK, Belarus - A top Belarusian official said late Saturday that the country has reached agreement with Russian state gas monopoly OAO Gazprom on a gas price for 2007, but Gazprom's chief spokesman said there was no deal.

Belarusian First Deputy Prime Minister Vladimir Semashko said Belarus would pay US$100 (euro76) per 1,000 cubic meters of gas _ US$5 (euro3.80) less than what Gazprom has demanded in talks to reach a new supply contract and avert a New Year's Day cutoff of deliveries to Belarus.

But Gazprom spokesman Sergei Kupriyanov told The Associated Press the statement was merely "Semashko's point of view" and the Belarusian position in negotiations. "This does not correspond to an actual agreement with Gazprom," he said, adding that talks would continue Sunday.

Speaking at a news conference hours after nightfall in the Belarusian capital, Minsk, Semashko said he intended to fly to Moscow on Sunday morning to join ongoing talks. Kupriyanov had said that there could be no full-fledged negotiations without Semashko, "the main negotiator" for the Belarusian side.

"We are approaching a solution to the problem," Semashko said of the bitter gas price dispute that could affect European supplies. He and other Belarusian officials have suggested they could hinder the transit of gas across Belarus to Europe if Gazprom halts supplies meant for Belarusian customers.

Belarus's authoritarian President Alexander Lukashenko, whose popularity and grip on the nation of 10 million could be weakened by an increase in the price for Russian gas, accused Gazprom on Friday of blackmail.

The politically charged dispute reflects strained relations between Belarus and Russia, whose close ties go back centuries but have been increasingly tense in recent years as Russian President Vladimir Putin's Kremlin has apparently tired of providing political and economic support for Lukashenko.

Gazprom, which has been raising prices closer to market levels after selling gas cheaply to ex-Soviet republics for years, is demanding Belarus pay US$105 (euro80) per 1,000 cubic meters in 2007 _ US$75 (euro57) in cash and US$30 (euro23) in shares of its gas pipeline operator, Beltransgaz.

The price would increase annually and reach a market-style European price _ minus the transit cost and export duties _ by 2011. For the next four years, Belarus would pay a portion of the cost in shares of Beltransgaz.

Semashko, however, said Belarus would pay US$100 (euro76) in cash in 2007 and that Gazprom would pay for half of Beltransgaz in cash. He said the gas price would would increase by US$11 (euro8) annually after 2007, reaching US$144 (euro109) in 2011 _ far less than the US$200 (euro152) Gazprom officials initially demanded for next year and have suggested would be the market price for Belarus today.

Semashko also said the fee for transit of Russian gas would be increased next year from US$0.75 (euro0.57) per 100 kilometers to US$1.65 (euro1.25). Gazprom officials have suggested they are prepared to pay twice the current fee.

The European Union and Germany, which receive some of their Russian gas via Belarus, have urged the neighbors to resolve their dispute quickly and guarantee supplies. Europe is wary of a repeat of the brief supply shortages that ensued when Gazprom halted deliveries to Ukraine during a similar dispute a year ago.

Russia provides more than two-fifths of the EU's gas consumption _ though most of it travels through Ukraine rather than Belarus _ and the price war with Ukraine provoked European concerns about Russia's reliability as an energy supplier.

Gazprom has warned Belarus not to siphon gas from the Russian-owned Yamal-Europe pipeline, which carries about two-thirds of the some 44 billion cubic meters of gas that transits Belarus annually en route to Europe _ mainly Germany, Poland and Lithuania.

Kupriyanov said Saturday that Gazprom was sending inspectors to monitor connections linking Yamal-Europe with the Belarusian pipeline system in a bid to ensure no gas is siphoned, and also inviting "independent international observers" to help monitor volume in the pipeline.

Earlier this month, the Russian Cabinet decided to raise customs duties on oil exports to Belarus, which will deprive its Soviet-style economy of profits it has reaped by exporting oil products made of cheap Russian oil.

Semashko said the customs duties would be "beyond the strength of the Belarusian economy" and that he hoped the issue could be resolved along with the gas price dispute.

A large Belarusian industrial concern that includes chemical plants, Belneftekhim, has suspended its 2007 contracts to buy oil from Russian companies and will seek alternative suppliers because the customs duties will make purchases from Russia too costly, its director Alexander Borovsky said.

Associated Press Writer Steve Gutterman contributed to this report from Moscow

Source:

http://www.chron.com/disp/story.mpl/ap/fn/4435326.html