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Russia-Belarus gas deal seen this week

22 November 2011 09:22 (UTC +04:00)

Russia’s current five-year gas agreement with Belarus expires on Jan. 1. Markets have been following the talks, as previous disagreements between Moscow and transit countries have hit export flows to the European market.

"The deal will be agreed during a state union meeting in Moscow on Nov. 25," a Russian government source said. "The price for Belarus will be close to the Russian one, plus transport costs."

The agreement was expected to be signed during a meeting of the Russia-Belarus Union, a low-profile political partnership.

"All documents are practically ready. It is not expected that the event will be postponed," Gazprom’s deputy head, Valery Golubev, was quoted as saying by Interfax news agency.

Sources said the countries are agreed on the gas price and transit tariff as well as on Gazprom’s acquisition of Belarus’ gas pipeline network, Beltransgaz.

Russia’s biggest company already owns 50 percent stake in Beltransgaz and is prepared to pay $2.5 billion for the remaining share.

A Gazprom spokesman declined to comment.

Around 20 percent of Russia’s annual gas exports to Europe flow via the Yamal-Europe pipeline that transits Belarus. Total Russian exports to Europe are forecast at 152 billion cubic metres this year, the bulk going through Ukraine.

Starting this month, Russia has also been sending gas -- at a pace of 27.5 billion cubic metres a year -- through the Nord Stream pipeline under the Baltic Sea to Germany.

PRICE

Gas export monopoly Gazprom has said Belarus paid $279.16 per 1,000 cubic metres of Russian gas in the third quarter.

The price was expected to rise to $286 in the last three months of the year -- well below the $446 European customers are paying in November on average.

Minsk, suffering from a deep economic crisis and spiralling inflation, has requested that the price it pays be cut and pegged to Russia’s cheaper domestic tariff. Russia and Belarus, together with Kazakhstan, have formed a customs union.

Domestic Russian prices vary depending how far a region is from the Yamal producing province, which accounts for 80 percent of production. This year, prices have averaged around 3,000 roubles (nearly $100) per 1,000 cubic metres.