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Ownership problems delay second leg of Yamal-Europe gas pipeline

The construction of a second leg of a pipeline delivering natural gas via Belarus to Europe has been delayed due to ownership disputes, Russia’s ambassador to Belarus said on Wednesday.

Belarusian President Alexander Lukashenko proposed on October 12 that Russia start to build a second leg of the Yamal-Europe gas pipeline, and offered free transit for five years. Alexander Surikov said the delay was unrelated to Russian state gas giant Gazprom’s problems in Belarus: “We burnt our fingers with the first leg due to ownership problems in Poland, and the construction of the second leg is being delayed until this issue is resolved.” The Yamal-Europe pipeline runs from northwest Siberia to Russia’s border with Belarus, and from there extends 2,000 km (1,240 miles) to Germany, via Poland. The addition of a second leg of the pipeline has been discussed since 2005, to meet Europe’s growing gas demand.

The Belarusian segment of the Yamal-Europe pipeline is 575 km (360 miles) long, and has capacity of around 33 billion cubic meters per year. Gazprom’s May 18 deal to buy 50% in Belarusian pipeline operator Beltransgaz for $2.5 billion in four equal installments by 2010 is expected to tighten the Russian gas monopoly’s operational control over the Yamal-Europe pipeline, so far its main export route to Central Europe. Commenting on the construction of the Nord Stream gas pipeline to run from Russia to Europe along the Baltic seabed, bypassing Belarus and Poland, Surikov said this project reflected the supplying country’s desire to avoid intermediaries to ensure reliable supplies. The Russian ambassador also said a final gas price for Belarus in 2008 would be defined in December this year. “The price of gas supplies, in my opinion, will be close to $125 [per 1,000 cubic meters] to reflect the current situation,” he told an energy forum in Minsk, adding that the price of $150-170 per 1,000 cubic meter was unrealistic for Russia’s ex-Soviet neighbor.

Belarusian Energy Minister Alexander Ozerets said on Tuesday that the country would receive 21.6 billion cubic meters of natural gas from Russia in 2008. The minister said after talks in Moscow last week that Belarus would pay 67% of the average European natural gas price in 2008 as previously agreed, but did not give an exact figure. Gazprom delivers over 20 billion cu m of natural gas to Belarus annually. This year Belarus has imported Russian gas at a cost of $100 per 1,000 cubic meter, but paid only 55% of the price in the H1 of the year, until Gazprom’s threats to cut supplies over arrears forced Belarus to agree to the full price. (