Russia cuts further gas supplies to Belarus: reports

By Polya Lesova , MarketWatch

LONDON (MarketWatch) -- Russia decreased natural-gas supplies to Belarus by 30% on Tuesday, deepening cuts put in place the previous day and escalating the two countries' dispute over unpaid debt, according to media reports.

State-controlled gas firm Gazprom reduced deliveries to Minsk by 15% on Monday and said the reduction may eventually reach up to 85%.

The two sides have been unable to resolve a dispute over unpaid debts. Gazprom says that Belarus owes it $192 million for gas it has already consumed, while Belarus says that Gazprom owes it $260 million in gas transit fees, according to reports.

Russia's Medvedev on Europe Financial Crisis

Russian President Dmitry Medvedev talks with WSJ Managing Editor Robert Thomson about the financial crisis in Europe and concerns about the euro.

In Minsk, the president of Belarus, Alexander Lukashenko, said Tuesday that Russian transit gas supplies to Europe will be reduced, the Associated Press reported.

In recent years, Russia has had several disputes over energy supply terms with its neighbors, including Belarus and Ukraine. Early last year, a dispute with Ukraine resulted in the disruption of Russian gas exports to Europe for several days.

Analysts said they expected the latest dispute to be resolved relatively quickly.

Jenia Ustinova, analyst at Eurasia Group, wrote in a note that "the small volumes involved pose little to no threat to summertime Europe's energy security."

Still, over the long term, disagreements between Belarus and Russia over various issues are likely to persist, according to Eurasia Group.

Lilit Gevorgyan, political analyst at IHS Global Insight, said that the Russian government is aware that "Lukashenko's moves are constrained by the fact that he remains an authoritarian leader."

"Ultimately Lukashenko needs Russia as his flirtation with the west stops when the latter makes demands for democratic openings, something that Lukashenka is not ready for," Gevorgyan wrote in a research note.

"Against this background, the Belarus-Russia gas row is likely to end with a new deal which will promptly return Lukashenko to the realm of Russian influence."

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


Partners: Social Network