MOSCOW (Reuters):
Russia and Belarus announced a last-minute deal on gas prices yesterday, moments before Moscow was to start cutting off supplies with potential disruption for customers in Europe.
Belarus Prime Minister Sergei Sidorsky arrived at Russian gas monopoly Gazprom's Moscow headquarters barely 30 minutes before Sunday's midnight deadline to sign the deal.
Gazprom had threatened to cut supplies to Belarus from January 1 if a deal on new gas prices to its neighbour was not reached by midnight. Minsk said it would retaliate by halting Russian gas crossing the country on its way to Western Europe.
"A midterm agreement was reached on gas prices to Belarus and on transit shipments to Europe," Gazprom boss Alexei Miller told a news briefing early on Monday.
Under the accord, Belarus agreed to pay Gazprom US$100 per 1,000 cubic metres of natural gas, up from the US$46 ex-Soviet Belarus has been paying until now. By comparison, Gazprom charges European customers over US$250.
In the past 12 months, Russia has agreed hefty price rises with ex-Soviet Ukraine, Georgia, Armenia and Moldova.
"The terms which have been fixed in this current agreement are the best which exist on the territory of the former Soviet Union," Miller said.
Russia, with huge energy reserves, supplies a quarter of Europe's gas to more than 20 countries with about 80 per cent of this going through Ukraine and the rest via Belarus.
Russia has threatened to cut off gas supplies to Belarus, which lies to its west, at 0700 GMT on January 1. As the dispute has escalated, Belarus has threatened retaliation by disrupting supplies crossing its territory to Europe.
The threat was voiced by deputy energy minister Eduard Tovpenets who was heading the Belarus delegation to Moscow.
The row with Belarus, hitherto a loyal Kremlin ally even as other ex-Soviet republics sought to move out of Moscow's orbit, is part of a wider drive by Gazprom to bring its prices in the former Soviet Union closer to European levels.
Other price disputes with Ukraine and Georgia have been settled.
JOINT ECONOMIC ZONE
The official in Minsk declined to say whether Minsk was prepared to offer concessions to Gazprom, which said on Thursday it would not change its latest offer and wanted Belarus to pay $105 per 1,000 cubic metres from 2007, up from $46 now.
Minsk argues it should pay much lower prices because Belarus and Russia are part of a joint economic zone. By comparison, Gazprom's customers in Europe pay more than $250.
Moscow says Minsk has no right to take action against supplies to Europe since, unlike Belarus's local pipelines, the transit links to Europe belong to Gazprom.
Russia was heavily criticised by politicians in the European Union and the United States after last year's cuts to Ukraine.
In Washington, U.S. State Department deputy spokesman Tom Casey told reporters energy resources decisions should not be made on anything other than market forces.
"That's what we'd like to see happen here ... If there were a cut-off of gas supplies to Belarus, I think the only people that would be harmed by it would be the average people in Belarus," he said.
Unlike the pro-Western leadership in Ukraine, Lukashenko, accused in the West of crushing human rights, has expressed loyalty to the Kremlin.
Relations have deteriorated as a result of what analysts say is Russian President Vladimir Putin's distaste for Belarus's Soviet-style economic policy and reluctance to share assets.
Gazprom also often seeks lucrative assets in neighbouring states and the dispute with Minsk has centred on Beltransgas, a local pipeline network. The gas monopoly agreed to value the network close to Belarus's estimates of $5 billion and asked Minsk to pay $75 per 1,000 cubic metres of gas in cash with the rest being covered by half of Beltransgas's shares over four years.
But on Thursday the firm said getting half of Beltransgas was not crucial and it would also accept cash only.
