Gazprom and the Government of the Republic of Belarus have signed the Protocol on contributions by Beltransgaz, the joint Russian-Belarusian gas transmission company, to the Innovation Fund of the Republican Energy Ministry.

Pursuant to the Protocol, the Belarusian party shall set the amount of contributions by Beltransgaz to Belarusian innovation funds in 2011–2012 at the level not exceeding the minimum contribution amount adopted in the Republic.

The Belarusian party guarantees not to impose individual taxes, charges and contributions on Beltransgaz. It is planned to use the funds released from a reduction in contributions to the innovation fund for underground gas storage facilities construction in Belarus.

The decisions were made in furtherance of the accords stipulated by the protocol of December 31, 2006 on setting up the joint Russian-Belarusian gas transmission company, Beltransgaz.

In addition, Gazprom and Beltransgaz signed the Addendum to the gas supply and transit contract for 2007–2011.

Due to the fact that the Belarusian party raised the 2010 wholesale markup for the gas sold by Beltransgaz to USD 11.09, as it was agreed on when Gazprom was purchasing a stake in the company, the rate for Russian gas transit via Beltransgaz owned networks will be equal to USD 1.88 per 100 kilometers in 2010.

Background:

On December 31, 2006 Gazprom and Beltransgaz signed the gas supply and transit contract for 2007–2011. In particular, starting from January 1, 2008 the contract set forth the price formula (corresponding to the price formula for Russian gas supply to Europe) and the discount rates for the market price in 2008–2010 (0.67, 0.8 and 0.9 respectively). However, during the world financial crisis Gazprom agreed to decrease the discount rate from 0.8 to 0.7 in 2009.

In accordance with the contract, the formula based price for the Russian gas delivered to  Belarus was equal to USD 169 per 1,000 cubic meters in the first quarter of 2010, USD 185 per 1,000 cubic meters in the second quarter, and it is assumed to be equal to USD 193–194 in the third quarter.

The protocol on setting up the joint Russian-Belarusian gas transmission company, Beltransgaz, provides that the rate for Russian gas transit via the company’s pipeline system in 2009–2011 can be increased in case the Belarusian party introduces the wholesale markups for the gas resold to the purchasers in the Republic of Belarus.

In May 2007 Gazprom and the State Property Committee of the Republic of Belarus signed the purchase and sale agreement for a 50 per cent stake in Beltransgaz amount to USD 2.5 billion to be paid by Gazprom in equal portions during four years. In  2010 the transaction was completed.