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Gazprom, Belarus clash on price as Jan 1 deadline nears
By Sebastian Smith
AFP
MOSCOW
Petroleumworld.com 12 27 06The latest negotiations between Belarus and Russia's gas giant Gazprom on a steep price increase ended in failure Tuesday, Gazprom said, as the clock ticked down on a New Year deadline for Belarus to accept the hike.
"Unfortunately, negotiations in fact ended without a result," Gazprom spokesman Sergei Kupriyanov said on Vesti 24 television.
Gazprom's contract with Belarus expires December 31 and the Russian monopoly, which controls the world's biggest natural gas reserves, has indicated it will halt deliveries to Belarus if the ex-Soviet republic does not agree to a more than doubling in price.
Alexander Medvedev, head of Gazprom's export branch, issued the same warning Tuesday, while reassuring European clients who rely on gas that transits through Belarus that they would not be affected.
"All the volumes will be delivered to other countries, even if Belarus does not have gas after January 1," Medvedev told journalists.
Western European clients relying on Belarus for transit of gas are anxious not to be hit by the row, which resembles a crisis between Gazprom and Ukraine at the start of 2006 in which supplies were temporarily cut to Ukraine, with a knock-on effect through the European Union.
About 80 percent of the Russian gas piped to Europe transits through Ukraine and about 20 percent through Belarus.
A Belarussian energy ministry official said he still hoped for an accord. "We continue to formulate our position, and we hope for an easing of Gazprom's position," the official, who was not identified, was quoted as saying by Interfax news agency.
He described threats by Gazprom that Belarus could face a cut-off as "rather brusque."
Meanwhile, ex-Soviet Azerbaijan announced it was rejecting a Gazprom demand for doubling of gas prices.
President Ilham Aliyev said Gazprom's demand for 235 dollars per 1,000 cubic metres of gas, compared to 110 dollars paid at present, was not in line with levels paid by other comparable partners.
"In 2007 Azerbaijan will not buy gas from Russia. It is not clear to us what factors the price of 235 dollars is based on," Aliyev said. "For example, Ukraine gets gas for 130 dollars, Armenia for 110 dollars."
Aliyev said that Azerbaijan, which has its own large oil and gas reserves, would cope without the Russian supplies.
Equally tense negotiations have been held for months between Gazprom and Georgia, another ex-Soviet republic that relies heavily on Russian energy.
Last week Gazprom indicated that Georgia had decided to reject Russian gas supplies. However, only hours later, the two sides announced having come to a deal.
Belarus currently pays Gazprom 46.68 dollars per 1,000 cubic metres of gas.
Gazprom has said it wants to charge around 200 dollars, unless Belarus agrees to sell 50 percent of its pipeline operator Beltransgaz, giving the Russian state-owned giant an important strategic foothold on the European Union's eastern border.
On Tuesday, Gazprom said it was prepared to scale back and charge only 110 dollars per 1,000 cubic metres. Later, Medvedev said the price would amount to 105 dollars.
This would consist of 75 dollars per 1,000 cubic metres in cash payments and the equivalent of another 30 dollars in shares of Beltransgas, he said.
"We have exhausted all possibilities for improving our offer," he told journalists.
"Those turning down such an offer, in my opinion, is are either people who do not understand its meaning, or on purpose are pushing for negotiations to collapse."
Gazprom says that Belarus is offering to pay about 40 dollars per 1,000 cubic metres of gas for consumption by the public, and 54 dollars for use by industry -- in line with the prices for customers in the Russian region of Smolensk, which borders Belarus.
Russia and Belarus have formed an economic union under which many economic barriers have been lifted and travel eased, although more ambitious political goals have been shelved.
AFP 26 1719 GMT 12 06
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