It was not immediately clear why Gazprom agreed to the lower price for 2007. But the contract locks Belarus, a former Soviet republic, into agreeing to pay increasing prices over the subsequent four years of the agreement.
 
The agreement also calls for Gazprom to purchase 50 per cent of the shares in Beltransgaz, the Belarusian pipeline network, a Gazprom spokesman said.
 
Midnight deadline
 
Gazprom had said it would cut supplies to Belarus from January 1 if a deal on new gas prices to its neighbour was not reached by midnight on Sunday.
 
Minsk said it would retaliate by halting Russian gas crossing the country on its way to Western Europe.
 
The gas row revived memories of a similar dispute with ex-Soviet Ukraine exactly one year ago which briefly disrupted Russian deliveries to Europe and shook confidence in Russia's reliability as an energy supplier.
 
Russia supplies about a quarter of Europe's gas needs and Gazprom ships about 20 per cent of the gas it exports to Europe via Belarus, with the rest going via Ukraine to the south.
 
Gazprom managers and Belarus negotiators were locked in last-ditch talks to beat the midnight deadline as most Russians prepared to greet the New Year, the country's biggest holiday.