Tensions simmer in Russia-Belarus gas stand-off - Summary

Moscow/Vienna - Belarus and Russia remained locked in a dispute Monday over delinquent Belarussian payments for Russian gas, with a near total shut-down of gas to its western neighbour still a possibility.

At certain times during the day, it seemed the two had struck a conciliatory mood, with Belarus offering to repay its debts within two weeks and Russia announcing a cutback of only 15 per cent of its gas deliveries, instead of the 85-per-cent cutoff previously threatened.

But tensions remained, especially after Russian gas officials said two weeks would be too long to wait for payment.

"No one will wait two weeks. The next discussion of the situation will take place at a meeting of the emergency headquarters of Gazprom on June 22 at 10:00 Moscow time (0600 GMT)," Gazprom spokesman Sergei Kupriyanov told the Tass news agency.

The threat of an 85-per-cent shut-off - which would leave just enough to maintain pressure in Russian pipelines running through Belarus - has spread fear in Belarus and beyond, although EU officials said Monday they did not anticipate any delivery problems due to the tensions between the two former Soviet republics.

However, gas prices surged on European markets as some traders feared the worst. A similar dispute with Ukraine in 2009 led Russia to cut off gas supplies in the middle of winter, sharply cutting supplies across Eastern Europe.

Officials on both sides seemed on Monday to try to ease some of the tension.

Vladimir Semashko, Belarus' first deputy premier, told journalists that Minsk was in a difficult situation regarding hard currency.

"We may not pay up today, but I think that in two weeks we'll find the possibility. We'll borrow (and) we'll settle up."

Semashko said Belarus needed to pay for gas and Russia for transit fees.

Russian Premier Vladimir Putin said Russia, for the time being, would reduce the delivery of gas to Belarus by no more than 15 per cent.

"By contract, we are absolutely justified, strictly speaking, in reducing deliveries by 85 per cent or more, but we won't do that because of the special relationship with Belorussian consumers," Putin said.

Russian gas monopoly Gazprom had earlier said it would gradually increase the cut-off to 85 per cent in response to what Moscow says is a debt of 192 million dollars for previous deliveries. Gazprom reported beginning the reduction of gas at 0600 GMT Monday.

In addition to the payment of 192 million dollars due, Minsk faces a bill on June 25 of 270 million dollars, Russian Deputy Premier Igor Sechin was quoted as saying by Tass.

Sechin said that over the past three months, the Belorussian gas transit company Beltransgaz "systematically underpaid for delivery of Russian gas."

Semashko said that Minsk was continuing negotiations with Moscow and that it planned to sign an agreement.

"If they pay us 217 million dollars for transit, we are prepared to pay 187 million dollars of our debt for gas," Semashko said.

Ukraine said earlier Monday that it was ready to increase delivery of gas through its pipelines to Western Europe, as Gazprom chief Alexei Miller disclosed that Russian President Dmitry Medevedev had given instructions to start cutting the gas.

Putin said that Russia's retreat on the planned cut-off of gas was made in order "to give our Belorussian colleagues the chance to respond and increase the level of financial discipline."

Russia is the biggest supplier of gas to Germany, with a share of 37 per cent. Austria gets half of its gas from Russia, while the shares for Bulgaria and Hungary are 95 per cent and 90 per cent, respectively.

Some 80 per cent of Russian gas to Germany is delivered via Ukraine, while a fifth is delivered through pipelines in Belarus.

Last week Gazprom had announced its aim to reduce by 85 per cent its gas deliveries to Belarus, with Minsk then threatening over the weekend to tap into the transit pipelines transporting gas to western Europe.

Gazprom said that if Belarus took such action, the company would pump its gas via Ukraine into Poland, circumventing Belarus. Gazprom would meet its delivery commitments to the West, Miller said.

The fight is seen by some analysts as a political game of chicken, seeing as how Belarus relies on Russia for so much political and financial support.


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