Gazprom to buy half of Beltransgaz for $2.5 billion

OAO Gazprom will gradually buy a 50% stake in Belarus state pipeline company Beltransgaz for $2.5 billion by 2010, the company said.

May 22nd, 2007

Uchenna Izundu
International Editor

LONDON, May 22 -- OAO Gazprom will gradually buy a 50% stake in Belarus state pipeline company Beltransgaz for $2.5 billion by 2010, the company said. Beltransgaz delivers Russian gas to the European Union and supplies Russian gas within Belarus.

According to the agreement signed by Gazprom and the Belarus state property committee, Gazprom will buy a 12.5% share in the company in four stages during 2007-10.

The contract, which took 13 years to finalize, strengthens Gazprom's grip over gas networks to the west and follows a major proposal agreed by Russia, Turkmenistan, and Kazakhstan more than a week ago to expand oil deliveries out of Central Asia via Russia, which has threatened plans by western governments to develop alternative supply routes outside of Russia (OGJ Online, May 14, 2007).

Beltransgaz must hold a meeting to elect a supervisory company after it has transferred the first 12.5% of the company to Gazprom.

Underpinning this agreement is the companies' pledge in December 2006 to set up a joint gas transmission venture to supply and transport gas across Belarus. In 2007 Gazprom will supply 21.8 billion cu m of gas to Belarus for $100/million cu m. The rise in prices to market rates for Belarus has seriously strained relations between the two countries and in turn, affected oil and gas supplies to Europe, prompting fears there about Russia as a reliable energy supplier.

Contact Uchenna Izundu at uchennai@pennwell.com.

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