BELARUS NEWS AND ANALYSIS

DATE:

30/12/2006

Gazprom, Belarus Talks Continue as Gas Cutoff Looms

By Lucian Kim

Dec. 30 (Bloomberg) -- OAO Gazprom, Russia's natural-gas monopoly, has yet to reach an agreement with Belarus on next year's gas price before a Jan. 1 cutoff that could curb supplies to Europe.

Gazprom wants to double the price for 1,000 cubic meters of gas to $105, while Belarus says it won't pay more than $75. The standoff is reminiscent of a similar price dispute with Ukraine a year ago, which led Gazprom to cut supplies, causing gas volumes to drop across Europe.

``Talks are going on,'' Gazprom spokesman Sergei Kupriyanov said in an e-mailed statement today. ``However, we don't expect any progress from these meetings until the arrival in Moscow of the chief negotiator, the First Deputy Prime Minister of Belarus, Vladimir Semashko.''

Semashko has no plans yet to fly to Moscow, a Belarus government spokesman, Alexander Timoshenko, said by phone from Minsk. Semashko still hasn't received an answer from Gazprom on Belarus's latest offer, Timoshenko said. He declined to comment on the offer.

``We've sent Mr. Semashko more than one invitation to come to Moscow for the continuation of talks,'' Kupriyanov said.

A fifth of Europe's gas imports from Russia pass through Belarus, and Belarusian officials have suggested they will help themselves to transit gas if Gazprom cuts off deliveries after a Jan. 1 deadline.

Gazprom this year will ship 30 billion cubic meters of gas to Europe via Belarus, half of it through its own Yamal-Europe pipeline, which has three sealed links to the Belarusian network.

Final Offer

If Belarus taps into the Yamal pipeline, it would constitute ``not only theft but theft after break-in and entry,'' Kupriyanov said in a television interview yesterday.

Gazprom's final offer is a four-year arrangement in which Belarus initially pays $75 per 1,000 cubic meters in cash. Belarus would pay the remaining $30 per 1,000 cubic meters using shares in Beltransgaz.

The cash portion would rise gradually over four years to reach European levels, and Gazprom would gain a 50 percent stake in national pipeline operator Beltransgaz by 2011.

To contact the reporter on this story: Lucian Kim in Moscow

Source:

http://www.bloomberg.com/apps/news?pid=20601085&sid=a528dkBLf1as&refer=europe