Russia Considers Gas Discounts for Belarus

Russia is considering offering Belarus a discount on natural gas prices, with a condition.

RIA Novosti reports Prime Minister Vladimir Putin commenting that Belarus would start to get a better gas price formula starting in 2012.  However, Putin noted that the matter was tied to Gazprom taking on the remaining 50% stake in Belarusian gas transportation company Beltransgaz.

The gas supply contract between the two countries expires this year. Renewal of the contract is implictly linked to the sale of the Beltransgaz stake.

Gazprom CEO Alexei Miller said negotiations could begin as early as September and new contracts could be signed by the end of the year. "Hydrocarbon market conditions are hard for consumers," he stressed. "Gas prices are high and it is tough for former USSR republics, including Belarus.

Presently, the gas transportation system that Beltransgaz operates includes 7,500 kilometers (4,660 miles) of gas pipelines, five compressor plants, three underground gas storage facilities, 233 gas distribution plants, 26 refueling compressor stations and six gas measuring stations. The company also operates the Gazprom-owned Belarusian section of the Yamal-Europe pipeline.

Relations between Russia and Belarus have been acrimonious in the recent past. Belarus wants to attract foreign investors to its energy and petrochemical industries and expand economic and political ties with the European Union, a move that irks Russian leaders.

In 2010, the two counties had a dispute over the Minsk's failure to pay a $192 million gas bill to the Russian gas-export monopoly. Russia threatened to cut supply delivers by as much as 85 percent, an action that could have theoretically impact natural gas deliveries to Western Europe.

Beltransgaz transports about 20 percent of Russia’s Europe-bound gas exports.