BELARUS NEWS AND ANALYSIS

DATE:

27/12/2006

Belarus firm on Russia gas demand

Belarus has said it does not expect Russian energy giant Gazprom to cut off its gas on New Year's Day, despite a row over the cost of supplies.

"There will be gas on 1 January," said Belarus' Deputy Prime Minister Vladimir Semashko after returning from failed talks on the issue in Moscow.

However, reports from Minsk said residents there had stocked up on warm clothing in anticipation of a shutdown.

Gazprom says Belarus must pay more than double the old price for gas from 2007.

Belarus currently pays $47 per 1,000 cubic metres for the gas it imports from Gazprom, Russia's state-owned gas monopoly.

RUSSIAN GAS COSTS FOR 2007

Ukraine: $130 for 1,000 cubic metres (was $95)

Georgia: $235 ($110)

Moldova: $170 ($160)

Belarus: Gazprom wants $110 ($47)

Azerbaijan: Gazprom wants $235 ($110)

Mr Semashko told journalists that a "preliminary agreement" had been reached on raising the price to $75, but Gazprom had unexpectedly repeated previous demands that prices should go up to $110.

Mr Semashko described this as a provocation, according to the Russian news agency Itar-Tass.

Gazprom also wants Belarus to hand over a 50% share of the country's distribution network, including a valuable transit pipeline which supplies gas to Poland and Germany.

Mr Semashko suggested that Belarus would not allow Gazprom's supplies to pass through its territory if the company cut off Belarussian gas supplies.

"We are mutually dependent," he said. "If I don't have a domestic gas supply contract, Gazprom won't have a transit deal."

'Strong-arm' tactics

The dispute has strained relations between Russia and Belarus, which are traditional allies.

Last week, Russian president Vladimir Putin and his Belarussian counterpart, Alexander Lukashenko, met in an effort to resolve the issue, but made little progress.

The dispute is similar to recent rows Russia has had with Ukraine and Georgia over what they pay for its gas.

Russia temporarily cut off gas supplies to Ukraine in January after a quarrel over pricing.

Moscow says its neighbours have been paying below-market rates and these now need to be brought into line with European prices.

Critics argue Moscow is using strong-arm tactics to consolidate its economic supremacy in the region, at a time when high demand for energy and fears of supply shortages have strengthened its position as Europe's leading gas supplier.

Analysts said a hefty price rise over the winter could further undermine Belarus' struggling, largely state-controlled, economy.

Last week, Georgia agreed to pay $235 for 1,000 cubic metres of gas, more than twice the previous price of $110.

Moscow has also renegotiated its gas contract with Bulgaria, which will see the latter pay up to 45% more for its gas imports over the next five years.

Source:

http://news.bbc.co.uk/2/hi/business/6211605.stm