BELARUS NEWS AND ANALYSIS

DATE:

02/01/2007

Belarus signs 'unfortunate' gas deal

Belarus has agreed to a more than doubling of the price it pays for Russian gas, signing what it called an 'unfortunate' deal two minutes before a midnight New Year's Eve deadline expired and narrowly averting a supply cut which could have hit deliveries to western Europe.

Under the five-year contract, Belarus agreed to pay $100 per 1,000 cubic metres of natural gas it buys from Russia this year, a substantial increase from the $45 it has paid until now but short of the $105 sought by Russian gas monopoly Gazprom.

The contract calls for substantial increases for each of the four years after 2007 so that by 2011 Belarus will pay the same 'market price' charged by Gazprom to its customers in Europe, Gazprom and Belarus government officials said. Most of those customers currently pay more than $200.

The deal also spells out terms for Gazprom to purchase a 50% stake in the Belarus state gas pipeline operator, Beltransgaz, and for an approximate doubling of the price Gazprom pays for transit rights to pump gas to European markets through Belarus's territory.

Gazprom said it was satisfied, but Belarussian Prime Minister Sergei Sidorsky did not hide his disappointment. 'The Belarussian side, in a difficult atmosphere on the eve of the New Year, signed an agreement on unfortunate terms,' he said.

Gazprom had warned that it would cut off its exports to Belarus on Monday unless the country accepted a new gas supply deal at higher prices. Belarus had threatened in response to disrupt Russian supplies to Europe which pass through its territory.

Source:

http://www.rte.ie/business/2007/0102/gas.html