Talks on gas supply to Belarus finalized

On December 31, 2006, the Gazprom Headquarters hosted the final round of the talks on gas supply to Belarus and the signing ceremony of a five-year Gas Supply & Transit Contract for 2007 through 2011 in the presence of Sergey Sidorsky, Government Chairman of the Republic of Belarus.

The parties identified the price of Russian gas for 2007 (US$ 100 per 1,000 cu m), the pricing formula starting from January 1, 2008 (which is in line with the Russian gas supply pricing formula for Europe) and the discounts to the market price for 2008, 2009 and 2010 (67%, 80% and 90%, respectively).

The parties also agreed on the tariff rate for gas supply by the Beltransgaz owned networks (US$ 1.45) and the service charge for the Yamal-Europe gas pipeline operation.

Under the Contract terms, Gazprom will pay US$ 2.5 bln for a 50% stake in Beltransgaz over the next four years.

All payments will be effectuated in cash.

“Gazprom is shifting over to the market principles of cooperation with absolutely all of the countries buying Russian gas, with both the objective global trends on hydrocarbon markets and the level of relationships in the gas industry taken into account. Signing the long-term Gas Supply Contract with Belarus enables to gradually switch within a four-year period to the market gas prices. Just like in the case of the majority of other countries importing Russian gas, Belarus will receive Russian gas under the commonly accepted formula depending, first and foremost, on a market situation and real market petroleum prices. Thus, we’ll advance to a fully understandable and transparent mechanism of gas pricing for Belarus, orienting ourselves to the market and gas business practices worldwide. At the same time, Gazprom’s acquisition of a 50% stake in Beltransgaz will reinforce Russia and Belarus’ integration in the gas sector”, – noted Gazprom Management Committee Chairman Alexey Miller on signing the Contract.

Information Directorate, OAO Gazprom

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