BELARUS NEWS AND ANALYSIS

DATE:

03/08/2007

Russia cancels gas cut-off to Belarus after payment

Russia and Belarus narrowly averted another energy crisis on Friday, reaching a last-minute agreement to cancel threatened cuts in Russian gas shipments that had rattled European nerves.

Gazprom backed down from a threat to slash gas supplies by almost half to Belarus, a key energy trasit state to western Europe, after Belarus began repayment of nearly half a billion dollars in overdue debt for past supplies.

"Today Beltransgaz has made the first payment for a significant part of the debt it owes Gazprom... The decision has been made to put off a reduction in gas supplies to Belarussian consumers," Gazprom said in a statement.

Belarussian gas pipeline operator Beltransgaz told AFP it had paid 190 million dollars to Gazprom out of a total of 456 million dollars (333 million euros) in overdue debt.

The Russian gas giant said in a statement it expected "full repayment of the debt within one week, and prompt payment of 100 percent of current gas bills."

A Gazprom official, speaking on condition of anonymity, told AFP a cut-off was still possible if the debt were not repaid in full by next week, though the timing and amount would have to be determined then.

The incident was the latest stand-off between Russia and one of its ex-Soviet neighbors to raise fears of supply cuts among western European consumers, who receive 20 percent of their Russian gas via Belarus.

European consumers briefly saw shipments of Russian oil fall in January, when Moscow cut off shipments through a Belarussian oil pipeline.

A similar dispute over gas prices between Russia and Ukraine, another key transit country, prompted cut-offs last year that hit supplies to western Europe and sparked a wide debate about growing reliance on Russian energy.

The European Commission responded by calling for a meeting next week of the EU's gas coordination group, saying in a statement Thursday that "a safe and undisturbed supply of energy is of key importance for Europe's economy."

Belarussian President Alexander Lukashenko said Thursday that Minsk would pay the full sum from national currency reserves, while slamming Russia for what he characterised as strong-arm tactics to gain Belarussian energy assets.

"Russia doesn't just want to privatise a few enterprises, it wants to take them for free. They want to privatise the whole country," he said.

Minsk and Moscow have repeatedly clashed in recent years as Gazprom has sought control of Belarussian gas infrastructure and Belarus has tried to hold on to steep subsidies for Russian gas.

Gazprom more than doubled gas prices to Belarus to 100 dollars (73 euros) per 1,000 cubic meters on January 1, and in May, it won a deal to acquire 50 percent of Belarus' national pipeline operator for 2.5 billion dollars.

Source:

http://dailynews.muzi.com/news/ll/english/10047368.shtml