BELARUS NEWS AND ANALYSIS

DATE:

31/12/2006

Belarus, Russia Conflict on Gas Deal

By YURAS KARMANAU
Associated Press Writer

MINSK, Belarus -- A top Belarusian official said Saturday that his country has reached agreement with Russian state natural gas monopoly Gazprom on a gas price for 2007. But Gazprom's chief spokesman denied there was a deal.

First Deputy Prime Minister Vladimir Semashko said Belarus would pay $100 per 1,000 cubic meters of gas - $5 less than what Gazprom has demanded in talks to avert a New Year's Day cutoff of deliveries.

But Gazprom spokesman Sergei Kupriyanov told The Associated Press the statement was merely "Semashko's point of view" and the Belarusian position in negotiations.

"This does not correspond to an actual agreement with Gazprom," he said, adding that talks would continue Sunday.

Belarusian President Alexander Lukashenko, an admirer of the Soviet Union, has kept Belarus's economy largely under central control and its industries depend on cheap Russian gas to remain competitive.

European nations are watching the talks with concern. They hope to avoid the supply shortages that ensued when Gazprom halted deliveries to Ukraine during a similar dispute a year ago.

Semashko and other officials have suggested they could hinder the transit of gas across Belarus to Europe if Gazprom halts supplies to Belarusian customers.

Lukashenko, an authoritarian leader whose grip on the nation of 10 million could be weakened by an increase in the price of Russian gas, accused Gazprom on Friday of blackmail.

The politically charged dispute reflects strained relations between Belarus and Russia, whose close ties go back centuries. In recent years, Russian President Vladimir Putin's Kremlin has apparently grown weary of providing political and economic support for Lukashenko.

Gazprom is raising prices closer to market levels after years of selling gas cheaply to former Soviet republics. The company is demanding Belarus pay $105 per 1,000 cubic meters in 2007 - $75 in cash and $30 in shares of its gas pipeline operator, Beltransgaz.

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

Semashko, however, said Belarus would pay $100 in cash in 2007 and that Gazprom would pay for half of Beltransgaz in cash. He said the price would increase by $11 annually after 2007, reaching $144 in 2011. That would be far less than the $200 Gazprom officials initially demanded for next year.

The European Union and Germany, which receive some of their Russian gas via Belarus, have urged the neighbors to resolve their dispute quickly and guarantee supplies.

Russia provides more than two-fifths of the EU's gas consumption - though most of it travels through Ukraine rather than Belarus.

Associated Press Writer Steve Gutterman contributed to this report from Moscow.

Source:

http://www.wvva.com/News/index.php?ID=9580