Gazprom threatens to cut gas, talks with Belarus fail

Russian gas giant OAO Gazprom has notified neighboring Belarus to accept a gas price hike of some $30 or be prepared for a cut in the gas supplies starting Jan.1.

"The current contract on gas supplies to Belarus will expire in six days," Russian news agencies quoted Gazprom's chief spokesman Sergei Kupriyanov as saying. "Belarus's negotiating position is irresponsible and puts the issue of the whole country's energy supplies under threat."

The Russian gas is currently bought by Belarus at $46 for 1,000 cubic meters, the same price as it is sold in the neighboring Smolensk region. Gazprom’s self-cost of gas production amounts to more than this price and the Russian monopoly initially demanded for $200 per 1,000 cubic meters, more than fourfold increase over the current price.

No results came out Tuesday, from a new round of talks with Belarus on 2007 prices but the firm is hoping for a decision to be reached before the New Year.

"There was a new round of talks today with Belarus's Deputy Prime Minister (Vladimir) Semashko. We broke up with no agreement. But we still have a chance to meet and agree before the New Year. Talks have not been suspended," Gazprom press secretary, Sergei Kupriyanov said.

A deal will be vital for both sides; for Belarus to take delivery of gas in 2007 and for Gazprom to transport gas smoothly via the ex-Soviet state to customers in Poland and Germany.

Kupriyanov had said Monday, if Belarus handed over 50 percent of its state-controlled gas transport network, the company would agree to a lower price of $80 per 1,000 cubic meters. On the other hand Belarusian leader Alexander Lukashenka insisted on maintaining subsidized prices next year.

Russia is the provider of a quarter of Europe’s gas and had earlier cut out gas supplies to Ukraine, disrupting deliveries to several European countries. The fresh energy dispute has aggravated major concern about Europe’s reliance on Russian gas.