BELARUS NEWS AND ANALYSIS

DATE:

31/12/2006

Gazprom, Belarus Hold Last-Ditch Talks to Avert Europe Gas Cuts

By Lucian Kim

Dec. 31 (Bloomberg) -- OAO Gazprom, Russia's natural-gas export monopoly, went into a final round of talks with Belarus on prices to avert a Jan. 1 cutoff that could curb supplies to Europe.

Belarusian First Deputy Prime Minister Vladimir Semashko is in Moscow today for talks and the two sides have agreed how to resolve the dispute, Alexander Timoshenko, a Belarus government spokesman, said in a phone interview from Minsk. Gazprom spokesman Sergei Kupriyanov said no accord has been reached. Gazprom has said Semashko, Belarus's chief negotiator, must come to Moscow for a deal to be signed.

``At the moment we still don't have a contract for next year,'' Kupriyanov said. ``We consider an agreement to be a signed contract.''

State-run Gazprom, which supplies a quarter of Europe's gas, cut off Ukraine a year ago over a similar dispute, slashing deliveries to European countries including Germany and Italy. A fifth of Russia's gas exports to Europe pass through Belarus.

European politicians criticized President Vladimir Putin this year for using government control of energy to boost Russia's economic clout, undermining the reliability of supplies from the world's biggest oil and gas exporter.

Gazprom wants to double the price for 1,000 cubic meters of gas to $105, while Belarus is insisting on a cheaper deal.

The Russian company has agreed on a price of $100 per 1,000 cubic meters, as well as on the price of gas transiting Belarus to Europe, Timoshenko said, citing Semashko.

The supposed agreement is Semashko's ``personal opinion,'' Kupriyanov said. He couldn't confirm Semashko's presence in Moscow.

Gas Price

Gazprom in January resolved the Ukraine dispute through an accord that almost doubled the gas price for that country to $95 per 1,000 cubic meters. In November, Ukraine agreed to pay $130 for the same amount next year.

Russia charges more than $200 per 1,000 cubic meters to European customers and Russian companies pay about $45 for the same amount.

Belarusian officials have suggested they will help themselves to transit gas if Gazprom cuts off deliveries after a Jan. 1 deadline.

Gazprom this year planned to ship 30 billion cubic meters of gas to Europe via Belarus, half of it through its own Yamal- Europe pipeline, which has three sealed links to the Belarusian network.

If Belarus taps into the Yamal pipeline, it would constitute ``not only theft but theft after break-in and entry,'' Kupriyanov said in a Dec. 29 television interview.

Gazprom has said its final offer is a four-year arrangement in which Belarus initially pays $75 per 1,000 cubic meters in cash. Belarus would pay the remaining $30 per 1,000 cubic meters using shares in Beltransgaz.

The cash portion would rise gradually over four years to reach European levels, and Gazprom would gain a 50 percent stake in national pipeline operator Beltransgaz by 2011.

Source:

http://www.bloomberg.com/apps/news?pid=20601085&sid=aZB1Gs.FVeIc&refer=europe