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LIVE

Thursday, 08 January, 2009, 23:40 GMT | more >>

Lukashenko flies into gas storm

By Upstream staff

Belarussian President Alexander Lukashenko flies to Moscow tomorrow for what look likely to be stormy talks on gas as Russia steps up pressure to cede control of pipelines or face steep price rises.

Brief statements released by Moscow and Minsk today said Lukashenko would meet Kremlin leader Vladimir Putin.

The has been speculation throughout the week that Lukashenko, who has raged against proposed price increases, would put off the trip. Russia's ambassador said last week prices could be quadrupled.

Since 1996 Lukashenko has since 1996 promoted the creation of a "union state" with his giant eastern neighbour.

Putin, while being one of a handful of world leaders to endorse Lukashenko's re-election, scarcely conceals his distaste for the veteran Belarussian leader.

During his annual TV phone-in programme last month, the Kremlin leader said Russia was prepared to cut oil supplies to Belarus if Lukashenko's administration kept using cheap crude imports for profitable sales to third countries.

He said that if no agreement were reached "we will be forced to impose some limitations which we would not want to do".

However, it is on gas that the talk will be toughest.

Lukashenko has threatened to sever all relations with Russia if it proceeds with the threatened sharp increases.

"We will survive, but you will lose the last ally," Lukashenko said in marks aimed at Putin in September. "You will simply lose face."

Russian gas giant Gazprom says it will push up prices if Belarus does not cede control of its gas pipeline network - proposing conditions it has promoted with other ex-Soviet states such as Ukraine, Georgia and Moldova.

Belarus pays about $47 per 1000 cubic metres for Russian gas at the moment, while Gazprom wants to raise prices to about $200 per Mcm, suggesting concessions on pipeline ownership would result in a price cut.

Belarus has repeatedly rejected such an offer.

A steep price increase would deal a severe blow to Belarus's economy, still run mainly on Soviet command lines and heavily dependent on cheap imported energy.