RUSSIA/ BELARUS: Russia's Gazprom pledges secure gas supplies to Europe amid no signs of an agreement with Belarus;Belarussians hopeful that the gas price dispute with Russia can be resolved.

Russia's gas monopoly Gazprom pledged on Thursday (December 28) to do all that is necessary to guarantee supplies to western Europe amid no signs of an agreement of gas price increase with Belarus. Gazprom, which supplies a quarter of Europe's gas needs or around 150 billion cubic metres (bcm) a year, often seeks control of enterprises in the former Soviet Union in exchange for lower gas prices. It does not disclose prices by country, but says average gas prices in Europe rose to 264.3 U.S. dollars (USD) per 1,000 cubic metres in the first half of 2006 from 185.6 in the first half of 2005. Gazprom's biggest clients in Europe are Germany, Italy, Turkey and France. Gazprom, which supplies Belarus with 21 bcm a year, had wanted Minsk to pay 200 USD per 1,000 cubic metres from 2007 instead of 46.7. But on Tuesday, the gas giant said it now wanted Belarus to pay 110, including 75 in cash and the rest in assets. Gazprom, which says it has offered big concessions on price to Belarus as negotiators raced to beat a December 31 deadline, said that it could offer no more sweeteners. "At this moment there is no further progress in negotiations (with Belarus). But at the same time we have reached mutual understanding on the cash payment plan at 75 U.S. dollars," said Kupriyanov. Belarus on Wednesday (December 27) issued an implicit threat that it could stop Russian gas deliveries through its pipelines to western Europe unless Gazprom relented on demands Minsk pay steep price increases in 2007. About 80 percent of Russian exports to Europe are pumped via Ukraine, with the rest going through Belarus. Russia supplies a quarter of Europe's gas, to more than 20 countries. Gazprom spokesman Sergei Kupriyanov told reporters in Moscow on Thursday that the company would do its utmost to maintain the supply to Europe. "Gazprom will do all it can to deliver a reliable and full supply of gas to our European customers through Belarussian territory. We will do all in our power to deliver our gas without any interruptions through our pipeline network," said Kupriyanov. In Minsk on Thursday (December 28), Belarussians said they were prepared for higher gas prices. "I'm not worried; bring the price (for gas) up, we'll even be glad," said Minsk resident Nadezhda. Another resident, Nikolai, said he did not want to see Belarus be a burden on its giant neighbour Russia. "You have to put yourself in their (Gazprom's) position. They can't sell us (gas) at low prices, and make a loss. We have to understand their position. Brother to brother we have to be able to reach a compromise and take a step back. This will be significant, but we have to prepare ourselves (for higher gas prices), and we have to develop our economy in such a way that we will not be a burden on Russia, and we can then continue to be friends," he said. Russia has cut gas supplies to some of its neighbours in past years as gas monopoly Gazprom declared a goal of bringing prices in the former Soviet Union closer to prices for Russian gas in Europe. The cuts have often come amid difficult political relations and in the case of Ukraine and Belarus have led to reduced Russian gas supplies to Europe. Belarus, whose President Alexander Lukashenko is accused in the West of crushing human rights, has long been a Russian ally. Relations have soured due to what analysts say is Kremlin leader Vladimir Putin's distaste for Belarus's Soviet-style economic policy and reluctance to share enterprises with Moscow.

ITN Source | December 29, 2006

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