Gazprom signs Belarus gas export deal

02 January 2007 10:25  [Source: ICIS news]

MOSCOW (ICIS news)--Russian gas major Gazprom said on Tuesday that it was satisfied with the agreement to export gas to Belarus.

 

Gazprom agreed to lower its price to $100 per thousand cubic metres (tcm) from 105/tcm on condition that Belarus pays $70/tcm of the 100/tcm in cash and the rest in shares of the country's gas pipeline facility Beltransgaz through 2011.

 

Belarus had previously demanded that Gazprom pay $2.5bn (€1.9bn) up front for a 50% stake in Beltransgaz in 2007.

 

The long-term contract to supply gas to Belarus involved "a gradual transition to market prices for gas in four years,'' Gazprom CEO Alexei Miller said.

 

The price will rise gradually, hitting 67% of European levels in 2008, 80% in 2009 and 90% in 2010. It will reach European levels in 2011, Miller said.

 

The deal, reportedly clinched just two minutes before midnight on New Year’s Eve, helped to avoid a repeat of the events of January 2006 when Gazprom briefly cut off gas shipments to the Ukraine in a similar price dispute, while Germany, Italy and Poland suffered from limited gas supplies.

 

Russia exports some 30bn cubic metres (bcm) of gas, or 20% of total exports to Europe, through Belarus, while about 80% of Russian exports to Europe are distributed via the Ukraine.

 

However, Belarus’ new gas price, which more than doubles the 2006 figure of $47/tcm, is set to affect the country’s petrochemical sector, notably its only nitrogen fertilizer producer Grodno Azot, which consumes nearly 8% of Belarus’ total natural gas demand, sources said.

 

($1 = €0.75)

By: Sergei Blagov
+44 20 8652 3214

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