Russia may raise gas prices for its political ally Belarus fourfold unless Moscow gets some control of gas pipelines, Russia's ambassador in Minsk said on Friday.
Such an increase could virtually destroy the Belarussian economy, which is still run along the Soviet-era command economy lines with the government controlling most prices and ordering companies what to produce.
Ambassador Alexander Surikov told a news conference Russia may raise gas prices for Belarus to $200 per 1,000 cubic meters from about $47 at the moment unless a deal allowing some degree of control over pipelines that carry gas to Russia's customers in Poland and Germany is reached. "Today we name a gas price for Belarus at $200 per 1,000 cubic meters," Surikov said.
Russia's gas giant Gazprom and Belarus have been in talks over creating a joint venture to manage gas pipelines for several years. But Minsk has repeatedly rejected Russian demands for more control over the pipelines.
President Alexander Lukashenko, accused in the West of crushing human rights and freedoms, has repeatedly defended low gas prices for Belarus, saying otherwise he might sever all relations with Russia.
Surikov also said Russia might cut oil supplies to Belarus significantly next year if the two sides fail to agree to unify duties on oil products refined at Belarussian refineries from Russian crude oil.
Surikov said Russia wanted Belarus to raise the duties to the Russian level of $180 from current $57. Moscow also wants Belarus to transfer up to 85 percent of the amount raised from the new oil products duties to the Russian state budget. "A process of signing the balance for next year is suspended because Russia wants to discuss a question of sharing export duties," he said.
Belarus will receive 19.75 million tonnes of crude oil from Russia this year and wanted to ask it to raise supplies next year to 21.5 million tonnes.
Experts said Belarus received about $3.7 billion in hard currency earnings from exporting oil products refined from the Russian crude. "I am not saying that we are giving someone a gift now but let's share the duties," Surikov said. Russia will also be unable to export electricity to Belarus next year as Moscow would need more to cover domestic demand. Russia is Belarus's main political ally. Lukashenko plans to meet Russian President Vladimir Putin in Moscow next week to discuss the issues.