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Russia-Belarus ink key gas transit deal

Moscow, July 3, 2010

Belarus and Russia have signed a gas transit deal expected to end disagreements that led to a cut in Russia's Europe-bound supplies flowing via Belarus last month, officials said.

Russian gas giant Gazprom said it had agreed to pay Belarus's gas pipeline operator Beltransgaz a gas transit fee that Minsk had long insisted upon.

'Gazprom and Beltransgaz have signed a supplement to the contract for supply and transit of gas for 2007-2011,' the Russian gas giant said.

'A fee for the transit of Russian gas along the Beltransgaz network will in 2010 amount to $1.88 per 100 kilometres.' Gazprom had earlier paid a transit fee of $1.45.

Beltransgaz spokesman Vladimir Chekov and Belarussian government spokesman Alexander Timoshenko confirmed the agreement had been signed.

The signing of the agreement comes after Belarussian President Alexander Lukashenko threatened to halt all of Russian energy supplies if Gazprom did not settle a debt for gas transit.

Gazprom last week paid $228 million in gas transit fees but Belarus said it had to pay another $32m. Gazprom also said it would settle the outstanding difference 'in the nearest future.'

Belarus's First Deputy Prime Minister Vladimir Semashko said Russia had admitted to owing it $32m for transit.

Analysts say the signing of the agreement will put to rest current disagreement over gas prices but a new energy conflict may flare later this year as Russian gas prices for Belarus are set to keep growing.

Minsk now has to pay $185 per 1,000 cubic metres and that figure is expected to grow to at least $193 in the third quarter.

Belarus says it sees no reason to accept a price increase since the two neighbours are working to ramp up economic co-operation.

Lukashenko is also bitter that Russia earlier this year offered Ukraine a discount of around 30 per cent on Russian gas imports, with those subsidies effectively worth $40 billion over the next 10 years.

The latest dispute flared on June 21 when Russia reduced gas supplies to Belarus over a debt of nearly $200 million.

After an initial cut of 15 per cent, Gazprom ramped up reductions to 60 per cent on June 23.

Following the cut, Lukashenko said he had ordered a shutdown of Russian gas transit deliveries to Europe in retaliation, raising fears in the European Union, where member states Lithuania, Germany and Poland take Russian gas delivered through Belarus.

Gazprom then said it had restarted gas supplies after Belarus paid off its debt.

In recent months Russia and Belarus have often been at loggerheads over energy prices and trade issues. The two countries together with Kazakhstan had been in talks to launch a joint customs bloc on July 1 but Minsk had bailed out at the last minute following disagreements.




Tags: Russia | Belarus | gas transit deal |

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