Russia, Belarus ink energy deal as talks go down to wire

Jan 1, 2007, 2:25 GMT

Minsk - The Russian national natural gas monopoly Gazprom signed a deal to deliver fuel to Belarus and onward to Europe only minutes before a deadline for the deal ran out, the Interfax news agency reported early Monday morning.

Belarus will purchase gas from Gazprom at 100 dollars per thousand cubic metres, the report said, citing unnamed Belarusian government officials.

There was no immediate confirmation of the deal from Moscow. The terms as described by Interfax were largely as had been predicted by Belarusian chief negotiator Vladimir Smeshko on Sunday.

Gazprom will purchase a 50 per cent stake in Belarus' natural gas pipeline network for 2.5 billion dollars, the report said, quoting Gazprom chairman Aleksei Miller.

Belarus will in exchange receive a four-year 'grace period,' during which Gazprom will gradually increase the price of gas sold to Belarus from 67 per cent of the European market rate to 100 per cent of European rates in 2011.

Under the agreement, transit fees paid by Gazprom to Belarus for shipments to Europe will increase from 75 cents per thousand cubic metres, to 1.45 dollars, and will remain fixed until 2011.

The current price of natural gas sold by Gazprom to Europe averages 230 dollars. Control of the Belarusian pipeline network had been a long-term goal of Gazprom, Russia's largest corporation.

Talks between Gazprom and the Belarusian government had been deadlocked for months, with the sides playing a high-stakes game of chicken as one of Europe's most important energy streams hung in the balance.

The previous contract for Russian gas sold to Belarus and for shipment across Belarus to Europe had been set to become ineffective at the end of 2006.

Gazprom as the talks went down to the wire repeatedly threatened to cut Belarus off from gas supplies completely, while Belarus threatened to halt Gazprom shipments across its territory to Europe.