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Last Updated: Thursday, 30 March 2006, 17:37 GMT 18:37 UK
Belarus hit by Russian gas hike
Gas pipeline
Belarus has enjoyed cheap gas prices
The head of Gazprom, Russia's largest gas company, has said Belarus will have to pay five times more for the fuel.

Gazprom boss Alexei Miller told the Belarusian energy minister that Russian gas "must be supplied at prices equivalent to the European level".

Belarus currently enjoys a significant reduction compared to the price other European nations have to pay.

Gazprom said Belarus' fivefold price rise was due to come into effect at the start of next year.

Belarus, which became independent from Russia in 1991 after the collapse of the Soviet Union, currently pays $47 per 1,000 cubic metres of Russian natural gas.

If the increase does goes ahead, Belarus, which has a command style economy, would be severely damaged, analysts believe.

It is the only former Soviet nation to have avoided a rise in gas prices in the past year. Belarus has had the same gas contract since 2004.

'Bargaining chip'

Oleg Maximov, an oil and gas analyst with the Troika Dialog investment bank in Moscow, said the move by Gazprom was "a bargaining chip" to buy control over Belarus' pipeline operator Beltransgaz. The operator also takes Russian gas to lucrative western markets.

Mr Maximov said Russia has been trying to negotiate with Belarus for some time to gain a controlling share in Beltransgaz.

Russia has been trying to push former Soviet nations in line with European nations, as the price of gas - like oil - has rocketed in recent years.

Russia stopped exporting gas to Ukraine in January this year, after Ukraine refused to accept a massive price hike from $50 to $230 for 1,000 cubic metres.

Moldova said it too was cut off after refusing to accept a price doubling, to $160 for 1,000 cubic metres.

In 2004, Gazprom stopped supplies to Belarus following a dispute over prices. At the time Belarusian President Alexander Lukashenka, who has just gained a third term in office, deemed the move "terrorism."

The row ceased after Belarus agreed to up the price from $30 to $47.

Gazprom is destined to deliver 21 billion cubic metres of gas to Belarus this year.

Country profile: Belarus
28 Mar 06 |  Country profiles
Moldova agrees Russian gas deal
17 Jan 06 |  Business

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