Deal Reached in Gas War?

"There is an agreement on the price of gas delivered to Belarus and on the price for transit" to Europe, Belarus governmment spokesman Alexander Timoshenko said.

But a Gazprom spokesman said that it was "premature" to talk of an agreement and stressed that a deal had yet to be signed.

On Friday, Belarus' President Alexander Lukashenko had said that his country was not going to "yield to Russia's gas blackmail.

"If this blackmail continues, we will take shelter in bunkers but we will not give in," Lukashenko said on national radio less than three days before the expiry of an ultimatum to accept higher prices or see supplies cut off.

Sergei Kyprianov, a Gazprom spokesman, meanwhile told Russian television that the Belarussian delegation was at the state-controlled gas giant's headquarters.

"Negotiations continue but for the moment there is no result."

Price increase

Currently, Belarus pays $46.68 dollars (35.5 euros) per 1,000 cubic meters of gas. Gazprom originally demanded an increase to $200, which is closer to western European prices, unless Belarus agreed to sell 50 percent of its domestic pipeline operator Beltransgaz.

Gazprom has since reduced that demand to $105 per 1,000 cubic meters -- $75 per 1,000 cubic meters in cash payments, plus the equivalent of another $30 in shares of Beltransgaz.

Sandwiched between Russia and the European Union, Belarus has threatened to retaliate to the gas hike by refusing to allow the transit of Russian gas to Europe, potentially hitting supplies to Germany, Lithuania and Poland.

Without a contract for its own supplies, Minsk argues, there can be no contract on transit, while Gazprom claims Belarus is preparing to dip into transiting gas should its domestic supply be cut off.

"We are in the final phase of negotiations. But we cannot drag (the decision) out any more," Kypryanov said, warning Minsk of the "serious consequences" for the Belarussian economy of a cut in supplies.

"Blackmail"

In an interview Friday with the French newspaper Le Figaro Gazprom vice-president Alexander Medvedev accused Minsk of "grotesque blackmail" in threatening a cut in supplies to Europe and spoke of a possible "rationing" leading to "shortages" in the EU. About 5 percent of gas consumed in the EU transits through Belarus.

The conflict echoes last year's winter price war between Russia and Ukraine over the supply and cost of gas which led to shortages in western Europe. But then the West supported pro-Western President Viktor Yushchenko, while Lukashenko has been accused by Washington of running the "last dictatorship in Europe."

The EU has limited itself to calling on the two parties to reach a deal that does not threaten gas transit to the west and French and German authorities have said they are not worried by the prospect of a shortage.

Ukraine announced on Thursday its readiness to increase the transit of Russian gas through its territory in case of possible disruptions on the Belarus route.