BELARUS NEWS AND ANALYSIS

DATE:

02/08/2007

Belarus agrees to pay Russian bill for natural gas

Reuters, The Associated Press

MOSCOW: The president of Belarus said Thursday that he had ordered his government to pay a $456 million debt to Russia for supplies of natural gas after Moscow threatened to halve gas deliveries, starting Friday.

The president, Aleksandr Lukashenko, also said that President Hugo Chavez of Venezuela might help pay the bill.

"Yes, we will return the money," he said. "We will be left without reserves, but our good friends including Hugo Chavez have promised to provide a credit on favorable terms."

He added that Western banks were also prepared to provide money and that the reserves would be replenished in a month.

Gazprom, the Russian energy company, threatened Wednesday to cut supplies of natural gas to Belarus by nearly half unless the debt of $456 million was repaid by Friday. The announcement raised fears that flows of natural gas through a transit pipeline to European customers could be affected.

Gazprom's announcement triggered bitter memories of a pricing dispute with Ukraine during which supplies to the European Union dropped in the first days of 2006. Ukraine siphoned natural gas from a transit pipeline after Gazprom halted direct shipments.

In a statement Thursday, the European Commission called on Russia and Belarus to reach a settlement quickly and "not to disturb, neither directly nor indirectly, the gas supply to EU member states."

More than 20 percent of Russia's shipments of natural gas to Europe go through Belarus, reaching buyers in Germany, Poland, Lithuania and Ukraine, as well as Russia's Baltic enclave of Kaliningrad.

The standoff over natural gas grew out of a hard-fought deal signed in 2006 that obliged Belarus to pay $100 per 1,000 cubic meters, or 35,000 cubic feet, of natural gas instead of $46.

The agreement allowed Minsk to pay $55 per 1,000 cubic meters for the first half of the year, but required payment of the balance of $456 million to Gazprom by July 23.

As part of the deal, Belarus agreed to sell half of its national pipeline company, Beltransgaz, to Gazprom for $2.5 billion. Gazprom has so far paid $625 million of that, but the money has been transferred to the Belarusian Finance Ministry, rather than being used to cover the bill.

Some observers have suggested that Gazprom is hoping to acquire further assets against Minsk's natural gas bills. On Thursday, Lukashenko lashed out at the apparent aspirations. "They want to privatize the whole country," he said.

Source:

http://www.iht.com/articles/2007/08/02/news/gas.php