Russia cuts Belarus supply; 'gas war' rise

MOSCOW: Russia cut gas supplies to Belarus by nearly two thirds on Wednesday, as a payment feud went into a third day and claimed its first European victim when Lithuania reported a drop in gas flow.

Lithuania said it had suffered a 30 percent reduction in supplies pumped through Belarus, after maverick Belarussian leader Alexander Lukashenko warned of a "gas war" with Moscow and shut down transit of Russian gas to Europe.

In a dramatic television appearance for the third day running, the chief executive of Gazprom said the Russian gas giant was cutting Belarus' supplies by 60 percent from Wednesday morning but said European customers should not worry.

"We have two pieces of news. One is good, the other is bad," a grim-faced Alexei Miller said in comments released by his company.

"Transit of Russian gas through the territory of Belarus is being implemented in the full amount and consumers of Russian gas do not experience any problems with it."

"The bad news is the Belarussian side is undertaking no action to settle the debt for Russian gas supplies," he said, adding that the cuts would continue in proportion to Belarus's outstanding debt.

Gazprom spokesman Sergei Kupriyanov declined to comment on Lithuania's report of the reduced energy flow when reached by AFP.

The dispute centres on Belarus' refusal to accept a hike in the price it pays for Russian gas from the 150 dollars per 1,000 cubic metres it paid on average last year to 169.20 dollars in the first quarter of this year and 184.80 dollars in the second quarter.

Gazprom said later Wednesday that Belarus had paid 260 million dollars at full price for gas supplies in May, but added that Minsk must also "immediately" cover 192 million dollars in arrears.

After Minsk said it saw no reason for price hikes since the two countries had been working to ramp up economic cooperation, Gazprom on Monday reduced gas supplies to Belarus by 15 percent and then by 30 percent Tuesday.

Belarus for its part says Gazprom owes it more than 200 million dollars in transit fees.

The gas giant has said it would incrementally reduce gas supplies up to 85 percent of the normal volume if the debt is not settled in the coming days.

Following Tuesday's cut, Lukashenko ordered a shutdown of Russian gas transit deliveries to Europe in retaliation, raising fears in the EU, whose members Lithuania, Germany and Poland depend on Russian gas piped through Belarus.

EU Commissioner Guenther Oettinger said Europe should not be "taken hostage" to what analysts call a largely political dispute.

"This is an issue between Belarus and Russia," he said.

Analysts say the dispute has been sharpened by Lukashenko turning away from traditional reliance on the Kremlin and pursuing closer ties with the EU.

In an escalating war of words, Lukashenko said Tuesday he would not be humiliated with references to "cutlets and sausages" by Moscow after his Russian counterpart Dmitry Medvedev said Russia could accept "neither pies nor butter nor cheese nor pancakes" when Belarus offered to foot the gas bill with machinery and other equipment.

In recent months Russia and cash-strapped Belarus have often been at loggerheads over energy prices and customs duties, but the latest dispute is the fiercest feud yet between the two ex-Soviet neighbors.

Minsk angered Moscow in May when it pulled out at the last minute from a key summit aimed at creating a joint customs bloc between Russia, Belarus and Kazakhstan, forcing Russia and Kazakhstan to launch the bloc alone.

Lukashenko displeased the Kremlin further when he gave sanctuary to former president Kurmanbek Bakiyev of Kyrgyzstan, who was deposed in a popular uprising in April.

"What does this mass fascination with food metaphors mean?" Russia's leading business daily Vedomosti quipped in an editorial on Wednesday.

"Gas supplies, debts, disputes over the customs union or Bakiyev, all of that is secondary. The fact of the matter is that the leaders of Russia and Belarus simply do not like each other."


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