BELARUS NEWS AND ANALYSIS

DATE:

12/10/2007

Belarus sticks to gas price mechanism for 2008

Reuters

MINSK, Oct 12 - Belarus and Russia have agreed to keep for 2008 a price mechanism from a current contract setting the price for imported Russian gas at 67 percent of European levels, Belarus's energy ministry said on Friday.

Ministry officials and Gazprom met in Moscow on Thursday to discuss prices two months after a dispute over Belarussian debts to the Russian gas export monopoly caused by a doubling of prices in January.

"During the talks, the two sides confirmed that conditions for the 2008 contract will not change," a ministry spokeswoman said.

"The Belarussian budget is based on prices in the contract with Gazprom, that is 67 percent of natural gas prices that Europeans pay," she said.

The spokeswoman said specific prices were not discussed. The figure used to compare with European prices in 2007 has not been disclosed.

A source close to the negotiations told Reuters that the notion of European pricing referred to the amount Poland paid for Russian gas, minus transit costs and export duties. It was not immediately known what price was paid by Poland.

Belarus had previously said it expected a price rise of 15-20 percent in 2008 from the $100 per 1,000 cubic metres it now pays. That price had no reference to European levels.

That price, set in January, represented a large rise from the previous level of $46. The two sides also agreed in the long-term to adjust prices relative to European prices and to maintain supply volumes.

Like most former Soviet republics, Belarus has long paid low prices for gas in comparison to the neighbouring European Union, which pays on average more than $250 per 1,000 cubic metres.

Negotiations between Moscow and ex-Soviet republics, notably Belarus and Ukraine, over prices have produced heated arguments and threats of supply cuts.

In January 2006, several EU countries were left with reduced supplies when Russia cut exports to Ukraine.

Kiev and Moscow this week solved a dispute over $1.2 billion of debt to Gazprom, after the Russian gas giant threatened supply cuts, in a move that was seen as political because the threat came shortly after a parliemntary election.

Source:

http://sg.news.yahoo.com/rtrs/20071012/tbs-belarus-russia-gas-7318940.html