UPDATE 2-Russia rejects offer of Belarus energy assets

Thu May 27, 2010 6:37pm BST

Quotes

   

* Belarus president offers control of gas grid, refinery

* Russia says control will not fix problems

* Customs union had been delayed

(Adds more details)

By Gleb Bryanski and Andrei Makhovsky

LAPPEENRANTA/MINSK, May 27 (Reuters) - A Belarussian offer to sell control of its major energy assets to Russian firms was unlikely to solve existing problems in energy price talks between the two nations, Russia's energy minister said.

President Alexander Lukashenko earlier on Thursday said Belarus would sell control of its national gas grid Beltransgaz and the Mozyr oil refinery in exchange for lower Russian oil and gas prices. [ID:nLDE64Q21Y]

"Having 51 percent (of Beltransgaz) does not solve the problem," Sergei Shmatko told reporters on the sidelines of Prime Minister Vladimir Putin's visit to Finland.

Lukashenko's comments came after talks about Russia's planned customs union, seen as a first step on the way to a free trade area with neighbouring Belarus and Kazakhstan, failed. [ID:nLDE60E1JI]

Russia has repeatedly clashed with ex-Soviet states over energy pricing in recent years, prompting politicians from the European Union and the United States to accuse the Kremlin of using its energy might to bring its neighbours to heel.

"If the Russians say that they will sell gas to Belarus at local Russian prices, then we won't be against them taking a controlling stake (of national gas grid Beltransgaz)," state agency Belta quoted Lukashenko as saying.

The "same goes for the (Mozyr) refinery," he said.

Last week, Gazprom accused Belarus of not paying enough for gas deliveries and amassing debts, raising the prospect of a new stand-off and supply cuts to Europe. [ID:nLDE64K0JG]

The Russian company said Belarus has been paying $150 per 1,000 cubic metres of gas since the beginning of the year instead of the $169.2 that Gazprom was charging in the first quarter and $184.8 in the second.

STRONG FOOTHOLD

Russian energy giant Gazprom (GAZP.MM) supplies a quarter of Europe's gas needs and sends one-fifth of its total exports through Belarus, while the rest go through Ukraine.

In February, Gazprom increased its stake in Beltransgaz to 50 percent, strengthening its foothold at the former Soviet Union republic energy market.

A month earlier, Russia briefly cut crude supplies to Belarussian refineries after initially failing to agree on oil price terms for this year.

The two countries reached an agreement in January to Europe's relief, though tension still remains as Belarus says Russia unlawfully imposed export duties on its oil products which flow to the country. [ID:nLDE62O0PF]

Some 42.58 percent of the Mozyr refinery, which suffered during the January row, belongs to Russia's Slavneft, whose ownership is shared by majors TNK-BP TNBPI.RTS and Gazprom Neft (GAZP.MM).

The Belarus government owns 43.76 percent of the plant.

Shmatko said as long as excise duties on oil products remained high in Belarus, processing oil in Belarussian refineries for domestic sales would be unprofitable for Russian firms.

"There is a whole system of equations, which from my point of view could be solved but we need to work on it," Shmatko said. (Writing by Dmitry Zhdannikov and Vladimir Soldatkin; Editing by Sharon Lindores and Amanda Cooper)