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Gazprom signs contract with Georgia, eyes other CIS deals

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MOSCOW, December 22 (RIA Novosti) - Russian natural gas monopoly Gazprom signed three contracts Friday for the supply of 1.1 billion cubic meters of gas to Georgia in 2007 at $235 per 1,000 cubic meters, the head of Gazprom's export arm, Gazexport, said.

Alexander Medvedev said the contracts were clinched with three companies on condition that 2006 supplies total 1.8 billion cubic meters.

The announcement came as a surprise following Georgia's earlier dismissal of Gazprom's new price, more than double the current $110 per 1,000 cubic meters, as "unacceptable" and "politically motivated."

"Gazprom views Georgia's position as a refusal to buy Russian gas in 2007," Sergei Kupriyanov, a spokesman for the state-controlled company, said earlier in the day.

Georgia has been in talks with neighboring Azerbaijan and Turkey to find alternative sources of natural gas after Gazprom said it would double the current price to $230 per 1,000 cubic meters as of 2007.

In mid-November, President Mikheil Saakashvili said his country would not buy Russian natural gas at the new rate because it is not a fair market price. He said Gazprom's price hike was politically motivated, and amounted to an economic blockade of Georgia.

But Kupriyanov said the new price reflects the company's strategy to apply market mechanisms to pricing gas in its trade with the Commonwealth of Independent States (CIS), a loose confederation of former Soviet republics.

Member states currently pay no more than $110 per 1,000 cubic meters of gas, and Gazprom would like to bring its CIS prices in line with the average price for Western European exports of $250 per 1,000 cubic meters.

Early this year, Gazprom signed an agreement on new export prices for Ukraine - the main transit route for Russian gas to Europe - after a pricing dispute between the two post-Soviet nations led to massive cuts of deliveries to Kiev and consequent disruptions of Europe-bound exports.

Gazprom may soon reach similar deals with other post-Soviet countries, including Belarus, Moldova and Azerbaijan.

The company's export chief said contracts with Belarus and Moldova could be signed by the end of this year, but stopped short of revealing any payment details.

According to some reports, Russian and Belarusian negotiators are discussing the possibility of using mixed payment models that would include both cash and assets.

Gazprom held a new round of talks with Azerbaijan Friday to discuss the supply volumes and gas price for 2007, and is now waiting for the South Caucasus state to reply to its new price proposals in the next few days.

"We expect a reply to come in within days, if not hours," Medvedev said.

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