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Sat, Dec 30, 2006 - Page 10 News List

Belarus and Russia hold new talks on gas dispute

POINTING FINGERS Both countries have threatened each other with disrupting gas supplies, but Russian firm Gazprom says that Minsk is guilty of blackmail

AFP , MOSCOW

A worker checks equipment at a gas compressor station of the Yamal-Europe pipeline near Nesvizh, Belarus, on Wednesday. Russia's natural gas monopoly Gazprom threatened to cut gas to Belarus on Monday.

PHOTO: AP

Russia and Belarus held new talks yesterday to defuse a row over natural gas imports that threaten to halt imports to Belarus and disrupt energy supplies to the EU on Monday.

Sergei Kupriyanov, a spokesman for the Russian state gas monopoly, Gazprom, said the head of Belarussian gas pipeline company Beltransgaz was in Moscow for further talks and that "contacts are being maintained permanently."

The situation is "tense, but there is still a chance of course," Kupriyanov said.

Mutual threats

Gazprom says it will end supplies to Belarus at 10am on Monday, New Year's Day, if the ex-Soviet republic fails to agree to a more than doubling of price.

Belarus, which lies sandwiched between Russia and the EU, threatens to retaliate by refusing to allow transit of Russian gas to Europe, potentially hitting supplies in Germany, Lithuania and Poland.

Belarus says that without a contract securing its own supply of natural gas, there can be no contract on transit.

Gazprom vice-president Alexander Medvedev told France's Le Figaro daily yesterday that Belarus was engaging in "grotesque blackmail" and that European clients could face shortfalls.

Meetings in Moscow and negotiations by telephone have taken place daily, but no deal on the price is in sight, raising the likelihood of a New Year's crisis similar to the cut-off of Russian gas 12 months ago to Ukraine, with knock-on effects through western Europe.

Gazprom insists that its price hikes -- already imposed on Ukraine, Georgia, and Moldova -- are part of a legitimate move to end Soviet-era subsidies and charge accepted international rates.

EU ties

However the Kremlin-connected gas giant's rough tactics against Russia's smaller neighbors has damaged Moscow's image abroad and caused alarm in Europe about what the EU sees as overreliance on Russian energy supplies.

The EU Commission says it has been following the situation "very closely" and has called for a rapid settlement.

Belarus serves as the transit point for roughly 20 percent of Russian gas flowing to Europe, amounting to about 5 percent of Europe's total gas needs.

The other 80 percent of westward Russian exports are piped via Ukraine.

Ukraine ready

Ukraine announced on Thursday its readiness to increase the transit of Russian gas through its territory in case of possible disruptions on the Belarus route.

"We could increase transit with the volume needed to ensure stable functioning of the economies of our European neighbors," Ukrainian Energy Minister Yury Boyko said.

Belarus pays Gazprom US$46.68 per 1,000m3 of gas under the current prices.

Gazprom originally demanded an increase to US$200, which is closer to western European prices, unless Belarus agreed to sell 50 percent of its domestic pipeline operator Beltransgaz.

Gazprom has since reduced that demand to US$105 per 1,000m3 -- US$75 per 1,000m3 in cash payments, plus the equivalent of another US$30 in shares of Beltransgaz.

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