MOSCOW, December 15 (RIA Novosti) - The Russian and Belarusian leaders will discuss the Union State and integration in Moscow Friday, a Kremlin source said.

The two ex-Soviet neighbors have been in talks since 1997 over a Union State with a common economic, customs and political space, but the negotiations have been complicated by a host of issues, including energy and financial disputes.

Vladimir Putin and Alexander Lukashenko are expected to approve the Union State's 2007 budget at a session of the Supreme State Council of the Russia-Belarus Union, which will focus on integration, the source said.

"Budget revenue is planned at 3.78 billion rubles (about $150 million), taking into account a 20% increase in the countries' contributions," he said.

On Tuesday, Russia introduced an oil export duty for Belarus, a follow up to a four-fold increase in the gas price the country will pay for Russian gas deliveries in 2007, a move that prompted a bitter rejoinder from Belarusian President Alexander Lukashenko who said that Union State members should enjoy price parity.