Russia resumes gas to Belarus, EU sees row over

By Vladimir Soldatkin and Gleb Bryanski

MOSCOW/NOVOKUZNETSK, June 24 (Reuters) - Russia resumed gas supplies to Belarus on Thursday after paying gas transit debts to Minsk in an effort to ease fears of supply cuts to the European Union, which said it believed the dispute was over.

EU members Poland and Lithuania, which saw a brief fall in deliveries on Wednesday, were getting full supplies on Thursday.

"We regret that a conflict erupted," Russian Prime Minister Vladimir Putin said after calling a meeting of top Russian energy officials in the Siberian town of Novokuznetsk, in the first conciliatory comment after days of tension.

"We hope it won't be repeated... We need to hold talks with our partners and solve all disputed issues in a normal, working, amicable atmosphere," he added.

Russia triggered the gas dispute last week when it said Belarus owed it around $200 million for gas deliveries and started to reduce supplies from Monday.

Minsk paid the bill on Wednesday and threatened to cut off Russian oil and gas flows to Europe if gas export monopoly Gazprom did not pay its debt for gas transit. Minsk said Gazprom owed it $260 million but Gazprom paid only $228 million so far.

Russia, the world's largest energy exporter, supplies Europe with 25 percent of gas needs, with four-fifths of that flowing via Ukraine and one-fifth via Belarus.

Russia also supplies 1 million barrels per day of oil to German and Polish refineries via Belarus and flow remained unaffected so far.

Neither Moscow nor Minsk have explained why relatively low debt levels sparked a dispute which saw Russia cutting gas flows to its neighbour for the first time.

But analysts noted that the row followed the souring of relations between the two neighbours after they failed to agree on unified customs rules.

Belarussian President Alexander Lukashenko also gave refuge to ousted Kyrgyz President Kurmanbek Bakiyev, despite Moscow's support for the new Kyrgyz leadership.

Energy markets have stayed largely unmoved so far -- in contrast to a similar gas row between Russia and Ukraine in January 2009 when prices spiked on supply shortages, tarnishing Russia's image as a reliable producer and spurring a European quest for new suppliers.

"If this had happened in Q4 or Q1 and been in Ukraine, the market would have gone vertical. In Belarus, in June, there's a limited impact. It is discounted in the short-term. The volumes are small," said Jason Durden, energy trader at London-based EnergyQuote.

Belarus is to hold presidential elections next year and Lukashenko, who has ruled the country since 1994 in what analysts describe as a Soviet authoritarian style, has pledged to raise state wages and salaries.

Belarus pays the lowest price among Russian gas customers and has bridled at recent increases, saying it should pay less for oil and gas if Moscow is serious about close ties. Tensions could still flare up as Gazprom and Belarus still disagree on the exact amount of debt to each other, future transit fees and gas prices.

Gazprom's stock on the benchmark MICEX exchange was down 1.5 percent at 1030 GMT, underperforming the broader index

Ukraine has promised to ship more Russian gas to Europe if Minsk transit cuts continue. (Reporting by Gleb Bryanski, writing by Jessica Bachman, editing by Anthony Barker and Keiron Henderson)


Partners: Social Network