BELARUS NEWS AND ANALYSIS

DATE:

14/03/2007

Belarus Asks for More Russian Gas

Belarus is determined to cut domestic gas prices from $160 to $140 per 1,000 cu. meters. The Russian gas monopolist Gazprom, however, presses for keeping Beltransgas's extra charge of $18 per 1,000 cu. meters, which will correspond to the company's market value given by the ABN Amro bank. The issue prevents Gazprom from signing a deal to acquire a stake in Beltransgaz.

Belarusian Deputy Prime Minister Vladimir Semashko told the Interfax news agency on Tuesday that the deal on Gazprom's purchase of 12.5 percent in the Beltransgas gas transit system is ready, but there are some "funny" disagreements left.

The Belarusian official found it funny that Gazprom demands that the contract be registered in Russia under the Russian legal system. The gas giant apparently wants to cut risks of volatile Belarusian legislation, aware of the frequency with which President Alexander Lukashenko invalidates bills with his personal decree. Mr. Semashko, however, still asks Gazprom CEO Alexey Miller to come to Belarus and sign the deal in Minsk.

The parties also clash over domestic gas prices in Belarus. Russia wants Beltransgas to keep an $18/1,000 cu. meters extra charge on gas supplies. Deputy Prime Minister Semashko says Belarus is ready to do it, "but only after 2011 when Gazprom has acquired 50 percent in Beltransgaz". Thus, Belarus may soon cut gas prices for industrial consumers from $160 to $140 per 1,000 cu. meters. Gazprom insists that if the extra charge is scrapped, Beltransgaz will stop turning profit. This issue still leaves the deal unsigned.

Belarus, in its turn, wants the gas transport system to work at its full capacity and pushes for the full loading. The pipeline now works at 50 percent of its capacity, Vladimir Semashko said, noting that operation at full capacity will bring more profit that the extra charge revenue.

A source of in Gazprom told Kommersant on Tuesday that the deal does not bind the Russian company to fill Belarus' gas transport system to the full.

Source:

http://www.kommersant.com/p749599/Gazprom_Beltransgaz_Deal/