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. Last Updated: 07/27/2016

Gazprom Says Minsk Must Pay Higher Rate

Gazprom said Thursday that Belarus must pay European rates for its gas -- an apparent bargaining ploy to win control over its neighbor's gas pipeline system and one that could stir trouble between the allies.

Belarus currently pays a rock-bottom price of roughly $47 per 1,000 cubic meters of Russian natural gas and is the only former Soviet country not to have seen Russia hike its gas bill last year.

Gazprom said in a statement that CEO Alexei Miller had told the Belarussian energy minister and the head of its state gas company at a meeting in Moscow that Russian gas "must be supplied at prices equivalent to the European level." The Belarussian side was due to present its proposals on April 30, the statement said.

Oil and gas analyst Oleg Maximov of the investment bank Troika Dialog called Gazprom's stance a "bargaining chip" to acquire control over Belarussian pipeline operator Beltransgaz, which also carries Russian gas to lucrative Western markets.

Acquiring the Belarussian pipeline system would see Gazprom achieve a goal of cementing control over its transit routes, he said. "It's a political question, at the end of the day it will be decided between the two presidents at the political level," Maximov said.

Toward the end of last year Russia renegotiated its gas contracts with its neighbors -- bringing them closer to European prices, which have soared in line with record oil prices.

Russia's move to sharply increase gas prices for Ukraine in January was widely seen as politically motivated pressure on Ukraine's new, Western-leaning government in the run up to elections.

The spat ended in doubling the price, and it appeared to have hampered the performance of President Viktor Yushchenko's party, which came third.

Meanwhile, Belarus was allowed to keep an old 2004 contract in place. President Alexander Lukashenko was re-elected with a landslide majority this month in an election international observers have called flawed.

The two nations signed a union treaty in 1996 that envisaged close political, economic and military ties but stopped short of creating a single state. Lukashenko has rejected a scenario Putin floated in 2002 under which Belarus would essentially be absorbed by Russia.