BELARUS NEWS AND ANALYSIS

DATE:

13/03/2009

Belarus Seeks to Double Russian Gas Flows, Challenging Ukraine

By Yuriy Humber

March 13 (Bloomberg) -- Belarus is offering to double the capacity of its natural-gas pipeline network to lure transit fees away from Ukraine, through which Russia supplies a fifth of Europe's gas, Belarusian Energy Minister Alexander Ozerets said.

OAO Gazprom, Russia's gas export monopoly, could pump an additional 34 billion cubic meters of the fuel a year via the Yamal-Europe pipeline that runs through Belarus by building a parallel line, Ozerets said in an interview in Minsk yesterday. The first part of the two-stage project could be ready in two years and cost less than $3 billion, he said.

Russia cut shipments to Ukraine in January for the third time in three years over a payment dispute, renewing concern over the reliability of the two countries in supplies. Prime Minister Vladimir Putin is pushing the Nord Stream pipeline to Germany under the Baltic Sea and the South Stream link to Bulgaria under the Black Sea to avoid Ukraine and Belarus.

"We've offered Yamal-Europe-2, which will bring a kind of harmony to European deliveries and add some diversity to Russian transit," Ozerets said. Russia boosted supplies via Belarus by 30 percent during the feud with Ukraine, he said.

The first of two Nord Stream lines, with a capacity of 27.5 billion cubic meters a year, may be ready by 2011, the Russian- German joint venture operating the project said in January. Nord Stream AG increased its budget for the two links by half last year to 7.4 billion euros ($9.6 billion).

Yamal-Europe-2 "will be considered in time, but after the building of Nord Stream," Gazprom spokesman Sergei Kupriyanov said by phone today. "It depends on how much demand there will be from consumers along the route."

Polish Support

Gazprom owns 25 percent of Beltransgas, the state-run Belarusian company that operates Yamal-Europe, and plans to increase that to 50 percent by 2011. Gazprom shipped 33 billion cubic meters of gas to Europe via Yamal-Europe last year, versus 120 through Ukraine.

The first stage of the proposed 1,660-kilometer (1,000-mile) addition would run from the central Belarusian city of Nesvizh across Poland to the German border. That would add 24 billion cubic meters of capacity. The second stage would expand the line linking Nesvizh and the Russian town of Torzhok and increase Belarus' total annual transit capacity to 66 billion cubic meters, or almost half of the amount Russia exports to Europe.

"Of course Polish gas demand will be key for the project as Germany should cover most of its needs with the Nord Stream route," Ozerets said.

Poland's government supports the Belarus proposal and considers Yamal-Europe-2 an alternative to the 1,200-kilometer Nord Stream, Economy Minister Waldemar Pawlak said last week.

To contact the reporters on this story: Yuriy Humber in Minsk via the Moscow newsroom at yhumber@bloomberg.net;

Source:

http://www.bloomberg.com/apps/news?pid=20601072&sid=atwDkWyctsvw

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