Belarus and Russia avoid New Year gas row

By Vladimir Soldatkin

MOSCOW, Dec 30 (Reuters) - Moscow and Minsk on Thursday looked set to avoid a gas pricing standoff, at least during the New Year festivities, ensuring energy supplies to Europe during one of the coldest winters on record.

Rows over prices and transit tariffs between Moscow and its Slavic neighbours, Belarus and Ukraine, have led to Russian oil and gas supply stoppages to Europe in the past, notably around January 1 when contracts expired.

But this time Moscow, which delivers around a quarter of Europe's gas needs, and its former Soviet satellites managed to continue providing Russia's crude oil and natural gas to the European Union without interruption -- despite some disagreements.

Minsk has asked Russia not to increase gas prices for 2011 to $210-$220 per 1,000 cubic meters, as Moscow has indicated. Belarus currently pays just over $190 per 1,000 cubic meters compared with $308 for Europe on average.

Belarus First Deputy Prime Minister Vladimir Semashko said on Thursday that Minsk hopes to reach an agreement with Russia for a lower gas price in 1.5-2 months, Interfax news agency reported.

"The first payment falls on Feb 20-23, when we will pay for January... We expect no incidents in the gas sector during New Year," he also said.

Low gas prices and financial help from Moscow are crucial for the newly re-elected Belarussian President Alexander Lukashenko's efforts to keep afloat the ailing economy.


On Wednesday, Russian Prime Minister Vladimir Putin also downplayed the prospect of a New Year energy dispute with neighbouring states, saying Ukraine and Belarus were fulfilling existing contracts.

Putin last week spoke with his Belarusian counterpart, Sergei Sidorsky, by phone about a contentious gas contract, in which Minsk is demanding a 2011 discount from Moscow.

Each year the countries make amendments to their five-year gas contract, which expires at the end of 2011, and this year, Belarus's argument for why it should pay a lower price for gas is related to the creation of a free-trade zone with Russia.

Russia and Belarus earlier this month also struck a deal on oil export duties, calming fears of a crude export cut.

Russia and Ukraine also signed an agreement, under which annual gas transhipments to Europe will be at least 112 billion cubic metres for the next five years.

Potential Russia's energy supply cuts would have dealt a heavy blow to the EU this winter as European gas and power consumption is increasing due to the onset of a cold spell. (Reporting by Vladimir Soldatkin; editing by Alison Birrane)


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