Belarus Pays for May Gas as Gazprom Deepens Cut, Demands Debt

By Anna Shiryaevskaya

June 23 (Bloomberg) -- Belarus paid OAO Gazprom in full for gas deliveries in May as the Russian export monopoly deepened a cut in supplies to the neighboring country today, while demanding payments for past deliveries.

OAO Beltransgaz, the Belarusian gas transportation company half-owned by Gazprom, paid $260.1 million for the May deliveries at contract prices, the Moscow-based company said in an e-mailed statement today.

"This is an encouraging sign that our Belarusian partners acknowledge their obligations under the existing supply contract, including its agreed pricing formula," Gazprom said.

Gazprom, the world's biggest gas producer, slashed 60 percent of deliveries to Belarus today, after lowering flows by 30 percent yesterday and 15 percent on June 21. The company demanded immediate payment of $192 million for supplies in the first four months of the year, saying Belarus underpaid.

Alexei Miller, Gazprom's chief executive officer, said fuel is being shipped to European customers across Belarus in full. Belarus President Aleksandr Lukashenko yesterday ordered that transit supplies from Russia to Europe be halted.

"Consumers of Russian gas are experiencing no problems with supplies," Miller said on Gazprom-owned NTV television.

Normal Flows

Russian gas is flowing "normally" to Poland via Belarus, Joanna Zakrzewska, a spokeswoman for Polskie Gornictwo Naftowe i Gazownictwo SA, the Warsaw-based company known as PGNiG that's Poland's dominant gas distribution company, said by phone, citing data as of 8 a.m. local time.

Lietuvos Dujos AB, Lithuania's gas utility, said gas flows across Belarus from Russia were unchanged this morning, Sigita Petrikonyte-Jurkuniene, a spokeswoman, said by phone.

Gazprom spokesman Sergei Kupriyanov said on Jun. 21 Belarus's debt may rise to $251 million if the country continues to underpay for May supplies. Belarus has been paying last year's price of $150 per 1,000 cubic meters of gas, rather than the contract price, which rose to about $184 in the second quarter, according to Gazprom.

Belarus has demanded to pay Russian prices as the countries negotiate a customs union with Kazakhstan. Russian Premier Vladimir said the troika will miss a July 1 start date, citing Belarus's push for subsidized energy as a stumbling block.

Gazprom and Belarus signed a last-minute agreement on December 31, 2006 to end a gas pricing dispute that threatened to disrupt deliveries to the EU. The accord more than doubled the fuel price for Belarus, while keeping a discount to what other consumers in the region pay.

Belarus, a country of about 10 million people, is the smaller of Gazprom's two transits route to Europe. Russia has also halted supplies to Ukraine, its main route, disrupting flows to Europe twice during freezing weather in 2006 and 2009.

Ukraine can increase Russian fuel exports to the European Union, Fuel and Energy Minister Yuriy Boyko said on the ministry website yesterday. Russia hasn't asked to use the spare capacity in the pipeline network, he said.

--With assistance from Nathaniel Espino in Warsaw, Milda Seputyte in Vilnius and Kateryna Choursina in Kiev. Editors: Torrey Clark,


Partners: Social Network