BELARUS NEWS AND ANALYSIS

DATE:

15/12/2007

Belarus to buy Q1 Russian gas for $119/tcm

MOSCOW, Dec 15 (Reuters) - Russia will sell natural gas to ex-Soviet neighbour Belarus at $119 per thousand cubic metres in the first quarter of 2008, 19 percent more than this year, a spokesman for gas monopoly Gazprom (GAZP.MM: Quote, Profile, Research) said on Saturday.

Sergei Kuprianov, speaking on Ekho-Moskvy radio station, said tariffs on the transit of Russian gas through Belarus will correspond to a five-year agreement that runs until 2011.

"We have a long-term agreement with Belarus," Kuprianov said.

Belarus enjoys the cheapest price among ex-Soviet countries for Russian gas. RIA-Novosti news agency earlier quoted an unnamed Gazprom official as saying the increase from next year was linked exclusively to higher global oil prices.

The ex-Soviet allies clashed last year when Belarus opposed Russian plans to more than double its gas price to $100 per thousand cubic metres in 2007.

The deal was signed only hours before the New Year, but the dispute escalated to include oil in the first days of January 2007 and caused a several-day closure of the Russian pipeline to Germany and Poland, which runs via Belarus.

After meeting on Friday in Minsk, Russian President Vladimir Putin and his Belarussian counterpart, Alexander Lukashenko, said Russia will raise the price for exports of natural gas to Belarus next year in line with existing agreements.

This will ensure stable supplies to Europe along a key pipeline supply route. Russia will also lend Belarus $1.5 billion to help its ally pay for gas imports.

Government sources in Minsk had earlier said Moscow was seeking an increase of up to 60 percent for 2008.

kraine, another key transit state, has agreed to pay Gazprom $179.50 per thousand cubic metres (tcm) for gas next year, up from $130.

The cost to European customers could rise to around $350 per tcm next year from $250-$260, as price formulas adjust to higher oil prices.

Belarus' economy, dominated by heavy industry, depends on cheap Russian energy. Its central bank reserves -- although they have doubled to $3.4 billion over the past 12 months -- offer scant cover for higher import costs. (Reporting by Robin Paxton)

Source:

http://uk.reuters.com/article/oilRpt/idUKL1536530120071215

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