BELARUS NEWS AND ANALYSIS

DATE:

07/12/2006

Belarus says state gas firm may be worth $10-17 bln

MINSK, Dec 7 (Reuters) - Belarus raised the stakes in its gas negotiations with Russia on Thursday by unveiling a huge increase in the value of its state gas company, the linchpin in discussions over gas prices and control of key supply pipelines.

Belarus's Prime Minister Sergei Sidorsky said state gas monopoly Beltransgas would be worth $10-17 billion if Russian gas exporter Gazprom carried out its threat to quadruple Belarus's gas price next year.

"The head of state has announced the market value is $10-17 billion. Belarus has supplied (Gazprom with) calculations based on economics which are in accordance with the president's valuation," Sidorsky told reporters.

Gazprom already controls Belarus' transit pipelines, which take gas through the ex-Soviet country to customers in western Europe. Belarus and Russia have been in talks for years about jointly running the local gas network.

But the question of Beltransgas's valuation has so far thwarted Gazprom's ambition of gaining control of its pipeline network. Belarus has previously valued Beltransgas at $5.5 billion, while Gazprom says it is worth $600 million.

They have asked ABN AMRO bank for an independent valuation.

"ABN AMRO has not yet named any figure. We have handed over documents. They haven't disputed anything," said Sidorsky.

Gazprom has put pressure on Belarus by threatening to raise the country's gas price from $47 per 1,000 cubic metres of gas to around $200 next year, a gambit that prompted President Alexander Lukashenko to threaten to sever ties with Russia.

The huge firm has issued similar threats to Russia's other neighbours, who now expect huge rises in energy costs next year, with prices approaching Western European tariffs of around $230-250.

The wave of price increases also puts an end to years of subsidies from Moscow to its neighbours. Gazprom exports around 30 billion cubic metres of gas a year through Belarus, which also imports around 22 bcm for its own consumption.

Source:

http://asia.news.yahoo.com/061207/3/2u1be.html