Belarus and Russia's natural gas monopoly signed a five-year contract for gas supplies early Monday, just hours before Russia had threatened to cut off supplies in a price dispute.
Under the agreement, Belarus will pay $100 per 1,000 cubic meters in 2007, a reduction from the $105 that Gazprom had demanded, according to Gazprom spokesman Sergei Kupriyanov.
It was not immediately clear why Gazprom agreed to the lower price for 2007. But the contract locks Belarus into agreeing to pay increasing prices over the subsequent four years.
The agreement also calls for Gazprom to purchase 50 percent of the shares in Beltransgaz, the Belarusian pipeline network, Kupriyanov said. Gazprom initially had stipulated that Belarus pay $30 of the new price in Beltransgaz shares, but under the new contract Belarus will pay for the gas all in cash and Gazprom will buy the pipeline shares in cash.
The threatened Russian cutoff had raised concerns in Western Europe about a possible reduction in those countries' supplies of Russian gas, much of which reaches Europe through pipelines that cross Belarus.
A similar dispute between Russia and Ukraine in early 2006 resulted in temporary reductions of supplies to Western Europe and raised wide concern about Russia's reliability as an energy partner.
That dispute also brought criticism of Russia for allegedly using its natural resources wealth as a political weapon. But unlike Ukraine, whose president has annoyed the Kremlin by trying to tilt his country Westward, Belarus has had close relations with Russia.
Although the new price is well below world market prices for natural gas, it still is likely to deal a blow to Belarus. The country retains a mostly centralized, Soviet-style economy, and its industries have depended on cheap Russian gas, previously at $47 per 1,000 cubic meters, to be competitive.
Subsequent years of the contract are likely to be even tougher. Russia long provided gas to ex-Soviet republics much cheaper than world market prices, but the contract with Belarus locks that country into an obligation to pay gradually increasing prices that will be commensurate with the world market by 2011.
Belarus's authoritarian President Alexander Lukashenko, whose grip could be weakened by an increase in the price for Russian gas, accused Gazprom on Friday of blackmail.
The dispute reflects strained relations between Belarus and Russia, whose close ties go back centuries but have been increasingly tense in recent years as Russian President Vladimir Putin's Kremlin apparently has tired of providing political and economic support for Lukashenko.
The European Union and Germany, which receive some of their Russian gas via Belarus, had urged the neighbors to resolve their dispute quickly and guarantee supplies.
Gazprom had warned Belarus not to siphon gas from the Russian-owned Yamal-Europe pipeline, which carries about two-thirds of the some 44 billion cubic meters of gas that transits Belarus annually en route to Europe, mainly Germany, Poland and Lithuania.
Earlier this month, the Russian Cabinet decided to raise customs duties on oil exports to Belarus, which will deprive its Soviet-style economy of profits it has reaped by exporting oil products made of cheap Russian oil.
A large Belarusian industrial concern that includes chemical plants, Belneftekhim, has suspended its 2007 contracts to buy oil from Russian companies and will seek alternative suppliers because the customs duties will make purchases from Russia too costly, its director Alexander Borovsky said.