Russia reduces gas supplies to Belarus over unpaid debt

Dispute is latest in a series of energy rows between Gazprom and neighbors

By Polya Lesova , MarketWatch

LONDON (MarketWatch) -- Russian state-controlled giant Gazprom reduced gas supplies to Belarus on Monday after the nation failed to pay its debts, sparking memories of previous energy disputes that resulted in cutting off supplies to Europe.

President Dmitry Medvedev told Gazprom's chief executive, Alexei Miller, to limit gas deliveries to Belarus, according to a transcript of their conversation published on the Kremlin's website.

Gas supplies to Belarus have been cut by 15% starting at 10 a.m. Moscow time and may gradually be reduced by up to 85%, news reports said, citing Gazprom officials.

The Russian corporation has said that supplies to other European countries will not be affected because there was spare capacity and supplies can be rerouted through Ukraine, Bloomberg News reported.

Gazprom (OGZPY 21.05, +0.50, +2.43%) has previously said that Belarus owes it $192 million for gas it has already consumed. Recent negotiations between the two sides failed to resolve the dispute.

The conflict is the latest in a string of disputes over energy supply terms between Gazprom and its neighbors. Over the past five years, Russia has had several conflicts over gas prices and supplies with both Belarus and Ukraine.

In early 2009, a row with Ukraine, a key transit route, disrupted Russian gas exports to Europe for several days in the middle of a freezing winter.

Polya Lesova is a reporter for MarketWatch, based in Frankfurt.


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