BELARUS NEWS AND ANALYSIS

DATE:

30/12/2006

No sign of progress in talks between Belarus, Russian giant over gas price dispute

The Associated Press

MOSCOW: Talks resumed Saturday between the Russian state natural gas monopoly, OAO Gazprom, and Belarusian officials seeking to avert a New Year's Day gas cutoff that could affect European supplies, officials said.

Energy officials from Belarus flew to Moscow late Friday for talks as the deadline loomed for a new agreement on supplies of Russian gas to the neighboring ex-Soviet republic, but there was no sign of progress in the bitter price dispute that reflected worsening relations between the two nations.

Negotiations resumed in the morning after breaking up for the night, according to Gazprom spokesman Sergei Kupriyanov, but he said progress was unlikely "before the arrival in Moscow of the main negotiator" from Belarus, First Deputy Prime Minister Vladimir Semashko.

But it was unclear whether Semashko would travel to Moscow. Officials in the Belarusian capital, Minsk, could not be reached for comment, and Kupriyanov's deputy, Sergei Chernykh, said he did not know whether the Belarusian official was coming.

Semashko held talks with Gazprom chief Alexei Miller earlier in the week, but returned to Minsk and suggested Belarus could siphon gas from pipelines carrying Russian gas across its territory to Europe if the company cuts off supplies meant for Belarus.

Gazprom has warned that it will suspend supplies to Belarus at 10 a.m. (0700GMT) Jan. 1 if no new contract is signed to replace the one that expires Sunday, and has warned its neighbor against disrupting deliveries to Europe.

Gazprom, which has been raising prices closer to market levels after selling gas cheaply to ex-Soviet republics for years, is demanding that Belarus pay US$105 (?80) per 1,000 cubic meters in 2007 - US$75 (?57) in cash and US$30 (?23) in shares of the company that controls its pipeline system, Beltransgaz.

The price would increase annually, reaching a market-style European price - minus the transit cost and export duties - by 2011. For the next four years, Belarus would pay a portion of the cost in shares of Beltransgaz.

Belarusian President Alexander Lukashenko, whose popularity and grip on the nation of 10 million could be weakened if he has to swallow a sharp increase in the price for Russian gas, accused Gazprom late Friday of blackmail. Gazprom initially was demanding US$200 (?152) per 1,000 cubic meters.

The European Union and Germany, which receive some of their Russian gas via Belarus, have urged the neighbors to resolve their dispute quickly and to guarantee supplies. Europe is wary of a repeat of the brief supply shortages that ensued when Gazprom halted deliveries to Ukraine during a similar dispute a year ago.

Russia provides more than two-fifths of the EU's gas consumption - though most of it travels through Ukraine rather than Belarus - and the price war with Ukraine over last New Year's provoked European concerns about Russia's reliability as an energy supplier.

Gazprom has warned Belarus not to siphon gas from the Russian-owned Yamal-Europe pipeline, which carries about two-thirds of the some 44 billion cubic meters of gas that transits Belarus annually en route to European countries - mainly Germany, Poland and Lithuania.

Associated Press writer Yuras Karmanau contributed to this story from Minsk, Belarus.

Source:

http://www.iht.com/articles/ap/2006/12/30/business/EU_FIN_Russia_Belarus_Gas_War.php