Gazprom threatens Belarus with lawsuits

Gazprom has warned Belarus that if it fails to pay for the Russian gas, the Russian gas holding will be free to take legal action against it. According to Gazprom's press office, the statement was made today by Deputy CEO Alexander Ananenkov at his meeting with General Director of Beltransgaz Vladimir Mayorov held to discuss the implementation of the gas supply contract for 2007-2011. However, the press office cited no specific gas debt figure.

On the night of December 31, 2006 after difficult negotiations between Russia's Gazprom and Belarusian officials a 5-year contract was signed. According to it, gas price for Belarus was increased from $46.68 to $100 per 1 thousand cubic meters of gas and the transit rate was set at $1.45. Starting from 2008 Belarus is to pay for the gas under a special formula, the aim of which is to draw the country gradually to a European price level. That's why this formula includes discounts for the period until 2010 inclusive, and starting from 2011 Minsk is to pay a 100% price. As for now, there are reduction factors used for every year - 0.67 for 2008, 0.8 for 2009 and 0.9 for 2010. All these conditions were agreed that time, on the night of December 31, 2006. Moreover, that time Gazprom and Minsk agreed that Belarus would sell 50% of Beltransgaz (gas transportation company of Belarus) to Gazprom for $2.5 billion, and Gazprom should pay for it in four tranches.