BELARUS NEWS AND ANALYSIS

DATE:

02/08/2007

EU to convene think-tank meeting on Russia-Belarus gas dispute

BRUSSELS, August 2 (RIA Novosti) - The European Commission will convene a meeting of its gas coordination group next week to discuss Russia's move to cut natural gas deliveries to Belarus, a spokesperson for the European Union's executive branch said Thursday.

Gazprom announced Wednesday that it would cut gas supplies to Belarus by 45% as of August 3 over the accumulated debt and lack of payment guarantees.

The gas coordination group, which includes government experts and representatives of fuel producers and consumers from EU member states, will consider ways for Russia and its neighbor, which transits Russian gas to the EU, to overcome the crisis.

Russia currently accounts for around 25% of the 27-nation bloc's natural gas consumption. However, Gazprom gave reassurances Wednesday that Europe-bound supplies would not be affected by the supply reduction to Belarus.

Early this year Russia doubled the gas price for Belarus to $100 per 1,000 cubic meters, which although being less than half the average rate to the European Union, still dealt a heavy blow to the Belarusian economy. The parties agreed that Belarus pay 55% of the total price in the first half of the year, and start paying the full amount from July 1. Belarus failed to repay its outstanding debt by July 23, which has exceeded $450 million.

Following Wednesday's announcement, Belarusian President Alexander Lukashenko pledged to repay the debt in the near future. "I have instructed the government to take $460 million from our reserve and pay for Russian gas supplies," he said.

A tit-for-tat pricing row between the two former Soviet allies late last year caused a suspension in Russian deliveries to Europe, which raised Europe's concerns over energy security and undermined Russia's reliability as a European energy exporter.

Source:

http://en.rian.ru/business/20070802/70212626.html