Belarus leader values national gas company at $12bn

“As an example I pointed to the acquisition of a Czech gas pipeline system by the Germans. They paid $5.5 billion for the Czech system, which was 2.5 to 3 times less than Beltransgaz. Beltransgaz, with its trunk pipelines, is about twice as expensive, at over $10 billion or maybe $12 billion. And some analysts price it at $17 billion,” Lukashenko said.

He said Belarus would insist on the adequate pricing of Beltransgaz. Russia and Belarus will determine the price by negotiation, not relying on the bank’s estimates. “Valuation by the bank is one of the proposals, and we will calculate everything. The price of Russian gas supplies to Belarus will depend on this,” Lukashenko stressed.

The bank ABN Amro was hired by the Belarusian government to carry out an independent valuation of Beltransgaz. The results are expected to be announced on 20 November 2006.

Gazprom is in talks with Belarus to create a joint venture on the basis of Beltransgaz, with equal stakes. Belarus wants Gazprom to buy a 50 percent stake in Beltransgaz at market value.

The price of Russian gas supplies to Belarus in 2007 will depend on whether Gazprom gets a stake in Beltransgaz. On 25 May 2006, Gazprom offered Beltransgaz a revised draft agreement putting the price of Russian gas at $200 per 1,000 cubic meters, a more than four-fold increase from the current level of $46.68. Meanwhile, Belarusian officials believe that Russia should raise gas prices for Belarus at the same rate as for Russia, within 11-15 percent. If Gazprom buys a stake in Beltransgaz, the two parties will reach a gas price agreement sooner, analysts say.