BELARUS NEWS AND ANALYSIS

DATE:

04/08/2007

Gazprom and Belarus Fail to Solve Gas Debt Crisis

By Sergei Balashov

After Belarus missed the deadline to pay off its half billion debt to Gazprom Monday the sides met on Tuesday to discuss the possible solutions for the impasse. Yet, Belorussian Energy Minister Alexander Ozerets who arrived in Moscow to participate in the talks and the Gazprom Management Committee failed to reach an agreement after Belarus asked for more time to make the due payments.

The two issues negotiated during the meetings were the amount of time Gazprom was willing to give Belarus to pay off its gas debt, which has already reached $500 million, and the amount of fine for missing the deadline. Gazprom's delegation will fly to Minsk on Wednesday to continue negotiations with Belorussian officials.

"We are asking for an extension; obviously we will have to pay a penalty that we are discussing at the moment," commented Alexander Ozerets, as quoted by Italian news agency AGI. Prime Minister Sergei Sidorsky reportedly plans to fly to Moscow news week to settle the debt issue himself.

The negotiations between Belarusian officials and Gazprom Management Committee were preceded by a series of firings of the heads of Belarus' leading oil and gas companies for their failure to respond to the hike in energy prices carried out by President Alexander Lukashenko.

Belarus' skyrocketing debt stems from the price hike for Russian energy resources. In 2006 Russia announced it would bring the gas prices for Belarus up to the market standards. After a long impasse, the Russian and Belarusian authorities agreed to a deal obliging Belarus to pay $100/1,000 cu. m of Russian gas, double the price they were paying before. The price was set to gradually escalate to that for the European countries. Gazprom agreed to pay $2.5 billion for 50 percent of Beltransgaz' shares, which it would gradually obtain by 2010. The transit fees for Russian gas flowing through Belarus are set at the maximum level of $1.45/1,000 cu. m for 2007.

Source:

http://www.oilandgaseurasia.com/articles/p/36/article/327/