Belarus averted a new year “gas war” with Russia last night after agreeing a price deal hours before a deadline that would have cut supplies for ten million people.

The deal — two minutes before the New Year began — came after the energy giant Gazprom threatened to leave Russia’s western neighbour in the cold in a row over the gas price for 2007.

Sergei Sidorsky, the Prime Minister of Belarus, made a late-night dash to Moscow to sign the agreement to pay $100 per 1,000 cubic metres of gas, just below the $105 demanded by Gazprom. The new price is more than double the amount paid by Belarus in 2006.

“The Belarussian side, in a difficult atmosphere on the eve of the New Year, signed an agreement on unfortunate terms,” Mr Sidorsky said.

Alexei Miller, Gazprom’s chief executive, said that Belarus had been offered “the best conditions”. In a rerun of Gazprom’s “gas war” with Ukraine last January, the company had said that supplies to Belarus would be switched off this morning unless it signed a new contract.

That would have left many of Belarus’s ten million people facing a cold start to the New Year and dealt a severe blow to the country’s Soviet-style command economy, which relies heavily on cheap energy.

The conflict also threatened to blow a chill wind over the European Union, which receives 20 per cent of its Russian imports through pipelines that cross Belarus. Belarus had given warning that it would halt the transit of gas to the EU if Gazprom switched off domestic supplies. Mr Miller said that, as part of the agreement, Gazprom would gain a 50 per cent stake in Belarus’s strategically important pipeline operator Beltransgaz, at a cost of $2.5 billion (£1.3 billion) over four years.

The transit price paid to Belarus for Russian gas supplies to Europe will also nearly double to $1.45 per 1,000 cubic metres traveling 100 kilometres.

Critics say that the Kremlin is using energy as a weapon to enforce its dominance over its former Soviet satellites and extract concessions on strategically important infrastructure.

The deal is a blow to President Lukashenko of Belarus, who accused Russia of blackmail last week. Belarus and Russia are in a loose economic and political partnership that is supposed to lead to formal union, and Mr Lukashenko had argued that gas prices in both countries should be the same. He now faces a possible economic slump triggered by the jump in fuel prices, which could prompt public protests against his authoritarian regime.

The EU had urged both sides to resolve the dispute quickly. Gazprom had warned its customers in Europe that it would not be able to make good any shortfalls if Belarus siphoned off gas from its pipelines to beat a blockade.

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