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    Update: No gas supplies to Belarus without contract - Gazprom

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    Gazprom will not supply natural gas to Belarus until a new contract is signed, but hopes it will not be forced to cut off supplies, an official spokesman for the Russian energy giant said Wednesday.

    MOSCOW, December 27 (RIA Novosti) - Gazprom will not supply natural gas to Belarus until a new contract is signed, but hopes it will not be forced to cut off supplies, an official spokesman for the Russian energy giant said Wednesday.

    Gas talks between Belarus and Gazprom [RTS: GAZP] - the ex-Soviet state's sole gas supplier - finished Tuesday with no agreement for next year. The situation is reminiscent of a bitter pricing row with Ukraine at the start of this year when Russia briefly cut off supplies, affecting consumers in Europe.

    "I believe we will not have to resort to drastic measures and will reach an agreement," Sergei Kupriyanov said on the Mayak radio station.

    Kupriyanov said supplies to Europe would not be affected in any event. But he said Belarusian officials' statements that Belarus would not suffer gas shortages being a transit country were worrying.

    Belarus's First Deputy Prime Minister Vladimir Semashko called Tuesday Gazprom's action a provocation and said the country would proceed from the current contract, expiring in four days, if a new contract was not signed by January 1, 2007.

    Kupriyanov said the statement was tantamount to the declaration of plans to siphon off gas from Europe-bound pipelines.

    "Statements that Belarus will stick to the 2006 price of $46.68 per 1,000 cu m until the [new] contract is signed can be described as plans to tap Europe-bound gas in the absence of a contract," he said.

    He said Russia, which has moved to bring gas prices for the post-Soviet nations to average European levels, had made "unprecedented concessions" to Minsk, proposing it the most beneficial terms among the former Soviet allies.

    The state-controlled monopoly proposed Belarus pay $75 per 1,000 cubic meters in cash plus $30 in shares of the Belarusian government-owned pipeline company, Beltransgaz. Belarus said it was only ready to pay $75 in cash.

    "Gazprom is not Santa Claus to make such gifts to Belarusian authorities," Kupriyanov said in response to Belarus's refusal to accept the price proposed by the company.

    Kupriyanov also said gas prices both in Belarus and on Russia's domestic market would come close to the European level by 2011 anyway.

    Belarus, which is building a Union State with Russia and portrays itself as Russia's most reliable ally, insists it is entitled to gas at a price equal to Russia's domestic level.

    Russian popular daily Kommersant said Wednesday, citing a Kremlin source, that Moscow at the talks had proposed Belarusian President Alexander Lukashenko choose between the market price and Moscow's conditions of finalizing the Union State.

    Among other concessions made by Gazprom is the approval of the highest price for Beltransgaz, $5 billion, determined following an independent valuation. The concern earlier insisted the pipeline company cost $3.3 billion.

    Semashko proposed Belarus buy 20 billion cu m of Russian gas at $75 for 1,000 cu m in 2007 and pay $1.5 billion for the supplies. Gazprom was offered to pay $2.5 billion for a 50% stake in Beltransgaz plus transit charges, according to Kupriyanov.

    This means, he said, that Gazprom would not receive any money for its supplies to Belarus, but would have to give over $1 billion to Lukashenko "as a present."

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