BELARUS NEWS AND ANALYSIS

DATE:

01/01/2007

FACTBOX-Belarus agrees to pay more for Russian gas

Jan 1 (Reuters) - Belarus will more than double its payments for Russian gas from Monday after Minsk and Moscow agreed late on Sunday to settle their pricing dispute, which was threatening to disrupt gas flows to Europe.

Following are key facts about the gas deal signed by the Belarus government and Russian gas monopoly Gazprom (GAZP.MM: Quote, Profile , Research):

GAS

Belarus will pay $100 per 1,000 cubic metres of natural gas from Monday, up from $46. The country buys around 21 billion cubic metres (bcm) of Russian gas every year, so its gas bill will rise to $2.1 billion a year from around $1 billion before.

Gazprom had wanted Belarus to increase payments to as much as $200 as it seeks higher revenues from all ex-Soviet states. Belarus argued it should pay the same for its gas as Russian domestic customers as it is building an economic union with Russia.

By comparison, Gazprom agreed this year to charge Ukraine $130 per 1,000 cubic metres, Moldova $170, Georgia $235, while consumers in Western Europe pay an average of over $250. Gazprom says even with the increase, Belarus will still have the cheapest deal of any ex-Soviet republic. Belarus says the increase will have a detrimental effect on its economy.

GAS TRANSIT

Gazprom, which supplies a quarter of Europe's gas needs, ships around 80 percent of that gas via the territory of Ukraine and the rest via Belarus.

Belarus is the key transit route for gas to Poland and Germany, which together receive about 30 bcm of Russian gas a year. Minsk had threatened to halt those shipments if a deal with Russia was not agreed by Monday.

Polish Economy Minister Piotr Wozniak told a news conference: "After a somewhat nervous night we were relieved to learn the gas situation on the eastern border is normal."

Under the deal, Gazprom will almost double transit payments to Belarus. The new fee will be $1.45 for every 1,000 cubic metres of gas pumped 100 km (62 miles). Up to now Belarus has charged Russia $0.75. Belarus had wanted Gazprom to pay $1.65.

BELARUS PIPELINES

Gazprom already owns all of Belarus' transit pipelines but also wants a share of the country's local pipelines, controlled by a state-run firm known as Beltransgas.

On Sunday, the two sides agreed Gazprom would pay $2.5 billion for ownership of 50 percent of Beltransgas. The money is to be paid in cash over four years. Belarus had wanted Gazprom to pay the entire sum in 2007. Gazprom had initially valued the entire firm at less than $1 billion.

OIL DELIVERIES

Belarus refines around 400,000 barrels per day of Russian crude. Until this year, the crude was shipped from Russia to Belarussian refineries without export duty being levied on them.

Russia has said it would impose an export duty of $180 per tonne on supplies to Belarus from 2007, while Minsk has said it would scrap all import deals with Russian oil firms in 2007.

Many analysts have said Moscow was using the oil export duty threat as a bargaining chip in its negotiations over gas. The two sides are continuing talks on crude oil on Monday. (Additional reporting by Warsaw bureau)

Source:

http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2007-01-01T133609Z_01_L01463716_RTRIDST_0_RUSSIA-BELARUS-GAS-FACTBOX.XML&rpc=66&type=qcna

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