U.S. News

Gazprom, Belarus Postpone Pipeline Deal

By Reuters

Russia's Gazprom and Belarus have postponed a deal to allow Gazprom to buy 12.5% in the state gas pipeline operator of Belarus, Gazprom and an official in Minsk said on Friday.

The deal was initially planned to be signed on Friday and the official said the delay was due to a minor disagreement. Russian gas export monopoly Gazprom said in a statement it hoped the deal would be signed before the end of May.

Gazprom is due to buy 12.5% of Beltransgas each year between 2007 and 2010, for $625 million for each stake, thus paying a total of $2.5 billion for half of the company.

Belarus long opposed the sale of half of Beltransgas to Gazprom, the world's largest gas producer, before agreeing to it last December as part of a broader gas pricing deal.

Gazprom threatened to cut gas supplies to Belarus if no agreement was reached, while Minsk said it would retaliate by cutting Russian gas supplies to Europe via its territory.

Gazprom supplies a quarter of Europe's gas needs with some 80% going via Ukraine and the rest crossing Belarus.

After Belarus agreed to sell half of Beltransgas, Gazprom said it would raise prices for Belarus to just $100 per 1,000 cubic metres from the previous $46 instead of the initially planned $200.

Some politicians in Belarus still call on the government to scrap the deal with Gazprom and keep Beltransgas under Minsk's control because of its strategic importance for the state.