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. Last Updated: 07/27/2016

Minsk Agrees to Pay $202M for Gas

Itar-TassBelarussian Prime Minister Novitsky shaking hands with Prime Minister Mikhail Kasyanov at their meeting in Moscow on Monday.
Belarussian Prime Minister Gennady Novitsky on Monday agreed that Minsk would pay Gazprom $202 million in debt and speed up privatization of state-owned gas monopoly Beltransgaz, ending a dispute with Moscow.

During talks with Prime Minister Mikhail Kasyanov, Belarus also agreed to buy gas from independent supplier Itera.

The dispute began earlier this month when Gazprom, with the Kremlin's backing, cut off 50 percent of its supplies to Belarus, saying that Minsk owed $202 million in back payments.

President Alexander Lukashenko last week attacked Gazprom and the Russian government for cutting off the supplies, saying the move was a ploy to force Belarus to sell Beltransgaz to Gazprom.

Kasyanov, however, said a lack of communication within the Belarussian government was to blame for Lukashenko's comments. "Incorrect information that was provided to Belarus' leadership is to blame for the outburst," Interfax quoted him as saying.

Belarus had signed a deal earlier this year to buy 10.2 billion cubic meters of gas from Gazprom at Russian domestic prices. The rest of the country's gas needs were to come from a supply deal with Itera.

Gazprom fulfilled its obligations to supply gas, Novitsky said, but Belarus failed to sign a deal with Itera to buy additional 6.3 bcm.

Kasyanov said the contract with Itera would be signed later Monday evening.

He also said Lukashenko would quickly remove all limitations on privatizing Beltransgaz. Draft amendments that would allow for the privatization are to be sent to the Belarussian parliament as soon as Tuesday, he said.

The privatization of Beltransgaz is likely to result in the creation of a Russia-Belarus joint venture.

Gazprom has expressed interest in participating in the joint venture to operate Beltransgaz, which supplies gas within Belarus and serves as Gazprom's major export route to Europe.

Novitsky, who arrived in Moscow on Sunday, said the joint venture would be created by mid-2003 as outlined in earlier bilateral agreements.

Analysts welcomed the rapid defusing of the gas dispute.

The Belarussian government seems to have recognized that an earlier Gazprom promise to limit supplies was not an empty threat and that it was time to move toward economic dialogue, said Steven Dashevsky, an analyst with Aton.

Kaha Kiknavelidze, an analyst with Troika Dialog, said Belarus did not have a strong negotiating position throughout the dispute.

Belarus could have threatened to charge Russia market rates for transporting gas to Europe, but Belarus would have had to pay more to buy gas from Russia at market prices, he said.

Kiknavelidze said he was skeptical that the gas dispute had been resolved because the two sides have yet to settle on a price and amount for next year's gas supplies.

The Russia-Belarus Union is to discuss quotas and prices for next year in early December.