Russia Cuts Gas Supplies To Belarus Over Pending Debt

Russia has begun cutting natural gas supplies to Belarus for falling behind in their payments.

After talks with Alexei Miller, CEO of the state-controlled gas monopoly Gazprom, President Dmitry Medvedev directed him to start cutting the deliveries.

Miller said in televised remarks that "From 10:00 a.m. Moscow time on June 21, we are introducing a regime of limiting supplies of Russian gas to Belarus by 15 per cent of the planned daily volume."

On Sunday, Belarus sent an emergency delegation to Moscow to try and resolve the payment dispute, but the talks ended without resolution.

Talks continued but that the gas cuts would be increased to 85 per cent in the coming days if a solution to the conflict is not found, Miller said.

Russia's state-owned Ria Novosti news agency quoted the chief executive as saying that supplies to Belarus would be reduced "day-by-day, proportionally to the debt's volume."

The order follows a warning by Medvedev last week that natural gas exports to the neighboring ex-Soviet Republic will be discontinued unless it paid off its gas debts within five days.

Gazprom says Belarus owes about $192 million after failing to pay increased prices, while Minsk challenged the Russian claim and refused to pay.

Last week, Belarus President Alexander Lukashenko said his country owed nothing to Gazprom, but would settle any disagreement. He accused Gazprom of owing it some $200 million for gas transit to Europe.

Like Ukraine, Belarus remains heavily dependent on Russia to meet its own energy needs, and a considerable proportion of Russian oil and gas exports to Europe pass through it. Belarus wants to settle any outstanding debt at last year's lower prices.

Russia increased the price of gas supplied to Belarus from $150 per 1,000 cubic meter last year to $169.20 in the first quarter of 2010 and $184.80 in the second. But Belarus continued to pay at $150.

Gazprom said at this rate it could owe $500 million or $600 million by the end of the year.

But Miller says that Belarus admitted having the debt and proposed to pay it with "machinery, equipment and various other products."

Medvedev said Lukashenko should come up with hard cash -- and not goods -- to pay the bill.

Despite being close allies, Russia and Belarus have had several rows in recent years, particularly over energy supplies.

This time, however, Gazprom has said it has the capacity to reroute the European gas supplies away from Belarus, and it says the cuts are likely to be less severe due to lower summertime needs.

It was the latest in a series of gas-supply disputes between Russia, which is maintaining its influence in the European and Central Asian energy sector, and its neighbors, causing worry for Europe.

In January 2006 and again in 2009, Russia cut gas supplies to Ukraine, causing knock-on effects all over Europe.

In January this year, a row nearly resulted in Russian oil deliveries to Belarus being halted.

Russia's critics have accused it of using its energy supplies as a political weapon. Russia boosted its federal budget revenues from energy product exports to 1.8 trillion rubles ($60 billion) in 2009, 31 per cent more than that of the previous year.

Russia is providing technical support to build nuclear power plants in many countries.

by RTT Staff Writer


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