RUSSIA: Russia's gas monopoly Gazprom says no result after new talks with Belarus, but gas supplies to Europe safe

Russia's gas monopoly Gazprom said on Tuesday (December 26) that a new round of talks with Belarus on gas prices for 2007 had yielded no results, but Europe was safe as Moscow had stockpiled enough gas in Germany and Austria to guard against possible cuts. Gazprom said it still hoped for a deal before the New Year (January 1) to allow Belarus to receive gas in 2007 and Gazprom to transit gas smoothly via the ex-Soviet state to customers in Poland and Germany. "I cannot offer any sensible explanation of the position that the Belarussian side have taken, because all the arguments that the Belarussian side have put forward during the talks -- namely the ending of relations (of Russia and Belarus as two allies) and the nature of the Belarussian economy -- all have been taken into account; and as a result of these (considerations) we have made our offer," Gazprom's export chief, Alexander Medvedev, told a news conference in Moscow on Tuesday. Talking afterwards to Reuters TV, Medvedev said Gazprom's offer to Belarus represented a comprehensive package. "It is a comprehensive proposal which will actually lead to a multi-billion (dollars) subsidy to Belarussia as a reflection of our union relations. And I believe that only people with bad intentions could underestimate these proposals." Medvedev said Gazprom would halt supplies to Belarus from January 1, but would continue transit shipments. "I don't want to be a negative dreamer, but if we will not have a contract (with Belarus), then on January 1st, we will deliver to the border of Belarussia only gas which is destinated to the European customers in accordance with our contracts," added Medvedev. An official at Belarus' Energy Ministry ruled out such a scenario: "I'm sure we will sign a deal before the New Year. It cannot be otherwise." Gazprom also said it may halt supplies to Azerbaijan in the Caucasus, saying the country had shown no interest in buying Russian gas at higher prices in 2007 amid rising output of its own. The threat, which would have no effect on Europe, follows Baku's pledge to help Georgia in a similar pricing dispute with Moscow. Gazprom has repeatedly warned Belarus it has to pay higher prices from 2007 and share control of its pipelines with the Russian firm or face reduced supplies from the New Year. Relations between Moscow and its former ally, Minsk, have hit a rocky patch ahead of the deadline, reviving memories of Gazprom's New Year cutoff of supplies to Ukraine, which produced gas shortages in Europe in the dead of winter. Gazprom, the world's largest gas producer, supplies a quarter of Europe's gas needs. The cutoff to Ukraine prompted European leaders to raise concerns over reliance on Russia. Belarus is also a key Russia gas route to Europe, but volumes are much smaller. A Russian gas industry source said Gazprom has stored much more gas than last year in Germany and Austria able to cover contracts for several weeks if needed. The industry source said extra gas had been pumped into Rheden, the biggest storage facility in Germany and in its Haidach storage in Austria. Gazprom had first sought a fourfold price increase for Belarus to 200 U.S. dollars per 1,000 cubic metres. A Gazprom spokesman said the compnay now wanted $110, of which $80 would be in cash, with the remainder covered by Beltransgas shares over four years. He said that Ukraine would pay $130 for gas in 2007 and Georgia $235. European consumers pay over $250 and Moldova had agreed to pay $170 from 2007 against the current $160.

ITN Source | December 27, 2006

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