Russia-Belarus Cold Gas War (December 2006)
Michael Batiukov
December 28, 2006
Another round of gas talks between Russia and Belarus broke up Tuesday Dec. 26, 2006 without any agreement. Belarusian “President” Alexandr Lukashenko has five days to make up his mind whether to pay market prices for Russian gas or agree that Belarus will become a part Russia.
In the former case, gas prices for Belarus will go up from $46.7 to $105 per 1,000 cu. meters. Should the latter be true, Belarus will have to enter the Russian-Belarusian United State on the Kremlin’s terms, Russian newspaper Kommersant writes.
Breaking a tradition of keeping business offers in secret, Gazprom released details on the course of gas talks with the Belarusian government. Russia entered the talks, suggesting raising prices to $200/1,000 cu. meters, the official said. However, as gas exports to Belarus are not taxed, the talks opened with the price of $170. Yet, the Belarusian party dismissed the offer as the one that runs against the allied spirit. Gazprom lowered the bar to $110 and ended up with offering $105 at Tuesday’s talks in Moscow.
Gazprom was expected to receive stocks of BelTransGaz in 2007-2010 as part of payments for natural gas. In addition, Gazprom would have received from Belarus $1.5 billion ($75/1,000 cu. meters) next year and $2.1 billion ($105) in 2008, sending the total of 20 billion cu. meters of gas to its Western neighbor. Gazprom Chief Executive Alexey Miller confirmed Tuesday that the Russian gas monopolist was willing to pay $2.5 billion for BelTransGaz’s shares. Managers at the Russian gas giant underscored, though, that they had met the Belarusians half-way, consenting to pay this sum, calculated on the basis of the company’s value of $5 billion – the highest evaluation, given by the ABN Amro auditor firm. Gazprom, however, says BelTransGaz is worth $3.5 billion.
Back in 2004, Gazprom turned off the tap for Belarus, which left Russia’s Kaliningrad Region, Lithuania and Poland without gas as the Belarusians siphoned off from Russia’s export pipes for their own use. Officials at Gazprom said Tuesday that “underground gas storages are used to meet gas shortfalls in crisis situations”. He also assured that European consumers will not be affected by a possible cut. Gazprom, however, was unable to say how much gas had been pumped into underground storages in Germany and Lithuania. Reaching no agreement on gas prices, Russia and Belarus also failed to sign a contract on Russian gas transit shipments to Europe.
Observers are noting harsh political divisions between Moscow and Minsk in the issue of prices of Russian energy resources delivered to Belarus. There are reasons to say that a new “gas war” could start in the “union state of Belarus and Russia”. A well-known Russian political analyst Andrei Piontkovskiy coments to the bilateral relations:
It is a natural end of “matrimonial” or “premarital” relations. The essence is that Russia, which is nostalgic about its imperial greatness, or to be more exact, Russian leaders, was waiting and believing that Aleksandr Lukashenko would “marry” it and join the Russian Federation as 8th subject. Aleksandr Lukashenko was skilfully playing on those Russia’s elite complexes of lost greatness for many years, and made them pay huge subsidies: billions dollars annually.
Finally, Putin has understood that Aleksandr Lukashenko will never unite. So he has decided to speak in a different language. All those phrasing about sister Slavic nations, about unity, were swept aside at once. In reality, the both authoritarian leaders are bargaining uncompromisingly now. By the way, the both are pursuing not only state interests, but their personal ones. Everybody in Russia knows that Putin is a shadow owner of Gazprom. And those schemes according to which oil and gas money are flowing to different presidential foundations in Belarus, are well-known too,” the political analyst said.
Guess who is a shadow owner of BelTransGaz?
Bingo!