BELARUS NEWS AND ANALYSIS

DATE:

02/08/2007

Belarus faces Russian gas squeeze over debt

Dmitry Zhdannikov
Reuters

MOSCOW - Russia will halve gas supplies to Belarus from tomorrow to punish Minsk for unpaid gas debt, the Russian gas monopoly said yesterday, sending a sharp reminder to Europe of its previous oil and gas cuts to the continent.

Gazprom, the world's top gas producer which supplies a quarter of Europe's gas, said it would continue to pump gas exports across Belarus but said it would notify its customers in more than 20 European countries about the move.

Analysts said Europe might face some disruptions should Gazprom turn off the taps and should Minsk start using gas from transit pipelines. But the effect would be limited as gas demand was low in summer, the analysts said.

"We will cut supplies by 45% but fully maintain our transit supplies to Europe via Belarus," said Gazprom's spokesman, Sergei Kupriyanov.

"Belarus has so far offered nothing to resolve the debt issue, which we consider a violation of our previous agreements.

"They have the money to pay back the debt and we do not understand why they don't want to do it."

The statement echoed previous disputes between Russia and its neighbours - Belarus and Ukraine - which led to gas and oil supply cuts to Europe in the past three winters, underlying Europe's heavy dependance on Russian energy resources.

During previous rows, Gazprom repeatedly accused Belarus and Ukraine of siphoning off gas from its transit pipelines. Both denied stealing gas but they also argued they could not cut supplies to the population during the cold winter months.

"We are in the middle of summer now so the situation is different," said Kupriyanov.

Belarus' energy ministry confirmed it had received the warning but declined to say whether a quick deal could be reached to resolve the dispute over a $456m energy debt.

Alexander Burgansky, analyst at Renaissance Capital, said he believed Belarus was unlikely to start taking gas from transit pipelines.

He said: "Consumption is seasonally low and underground storage facilities are full everywhere."

Niall Trimble of Energy Contract said: "Supply disruption in the summer is not generally a problem."

A German trader said he was not seriously concerned: "A few days would be all right because we are in midsummer and stocks are high because the winter was mild."

But the European Commission said it was taking the matter "very seriously" and called on both parties to resolve the row.

Polish Economy Minister Piotr Wozniak said he had not yet seen any drops in pressure: "So far, gas is flowing normally."

Source:

http://www.businessday.co.za/articles/world.aspx?ID=BD4A530488

Google