BELARUS NEWS AND ANALYSIS

DATE:

01/08/2007

Fears of new energy war as Russia slashes gas supply to Belarus

Russia's President Putin has sparked fears of a new 'energy war' with the announcement that Gazprom, Russia's state-controlled natural gas monopoly, will halve its gas supplies to Belarus after Minsk failed to pay in full for previous shipments.

The world's biggest gas producer sought to allay fears the decision could reduce gas flowing through a key transit pipeline that handles more than 20 percent of Russia's gas exports to Europe. Gazprom provides a quarter of the gas Europe uses.

"Gazprom will take all possible measures for the transportation of Russian gas through the territory of Belarus in full accordance with current obligations to European customers," the company said in a statement.

The announcement came after Russia's former Soviet neighbor missed a July 23 deadline for payment of nearly ?250 million on its overdue bill.

Two rounds of talks in the past week between Belarusian officials and Gazprom have brought no results and today's announcement appeared to be a negotiating tactic by the gas monopoly.

"Belarus is currently preparing its proposals for Gazprom to resolve this situation," said Andrei Zhukov, an aide to the Belarus Energy minister.

He said the issue was being discussed with the Belarus government and the state pipeline operator, Beltransgaz.

Gazprom spokesman Sergei Kuprianov said the transit pipeline supplies customers in Germany, Poland, Lithuania and Ukraine as well as the Russia's Baltic enclave of Kaliningrad.

"We are acting in strict accordance with our contract," Kuprianov told The Associated Press.

Russia has had traditionally warm ties with Belarus, whose president Alexander Lukashenko has been described as 'Europe's last dictator.'

But the relationship soured over the New Year after Russia doubled the price Minsk pays for its gas in a deal signed minutes before a midnight deadline.

Weeks later, a dispute over oil duties saw Russia temporarily halt crude supplies to Minsk, which led to brief shortfalls in Europe.

"Gazprom either wants to get the money or participate in the privatizations of the most important enterprises in Belarus," the country's former Prime Minister, Mikhail Chigir told the Associated Press. "Lukashenko doesn't plan to give up the former, and particularly the latter, without a fight."

Chigir said Belarus can afford to pay, but is holding out for loans or subsidies from the Russian government.

Source:

http://www.dailymail.co.uk/pages/live/articles/news/worldnews.html?in_article_id=472405&in_page_id=1811

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