UPDATE 2-Russia threatens to cut Belarus gas supplies Monday

By Dmitry Sergeyev and Andrei Makhovsky

ST PETERSBURG, Russia/SHKLOV, Belarus, June 18 (Reuters) - Russia said it will cut 85 percent of gas supplies to Belarus from Monday if its ex-Soviet neighbour fails to pay $192 million in debt to Gazprom (GAZP.MM: Quote), which Minsk denied it owes.

Europe pays close attention to Russia's gas price rows with its neighbours after its supplies to Europe came to a halt for almost two weeks in January 2009 while Moscow and Ukraine argued over prices and transit terms.

Russian President Dmitry Medvedev gave Belarus -- whose relations with Moscow have soured in recent years over trade issues, including gas and oil supply prices -- a five-day ultimatum on Tuesday in a televised meeting with Gazprom Chief Executive Alexei Miller [ID:nN17257061]

"From Monday morning at 10 am (0600 GMT) we are prepared to cut supplies by 85 percent," a Gazprom spokesman said at the St Petersburg Economic Forum on Friday.

Belarus President Alexander Lukashenko said on Friday that he did not think his country had any debts outstanding for Russian gas -- for which it has asked to pay last year's lower prices -- but would settle any disagreement over the issue.

"If you come at it from Russia's perspective then it is a debt. If you come at it from what I talked about, there is no debt. I think we will work something out," Lukashenko told reporters.

Belarus is to pay $187 per 1,000 cubic metres on average this year, compared with $148 in 2009.

Medvedev has shrugged off Lukashenko's request for a reprieve, saying hard economic times could not be used as an excuse.

Gazprom claims Belarus has been paying $150 per 1,000 cubic meters of gas instead of the $169.20 that Gazprom charged in the first quarter and $184.80 in the second, and that total debt has amounted to $192 million for the year.

Belarus pays the lowest gas price among Gazprom's customers, but it has repeatedly said that it should pay less for both gas and oil if it is to join a Russia-dominated customs union with Kazakhstan.

By comparison, Ukraine, another former Soviet satellite, pays Gazprom around $234 per 1,000 cubic metres.

Lukashenko said Belarus is ready to join customs union with Russia and Kazakhstan if Russia drops oil exports duties from 2011 and on oil products from July 1, 2010. [ID:nLDE60E1JI]

(Reporting by Dmitry Sergeyev; Writing in Moscow by Jessica Bachman; Editing by Lidia Kelly, Jon Loades-Carter and Alison Birrane)


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