BELARUS NEWS AND ANALYSIS

DATE:

01/08/2007

Gazprom to 'halve gas supplies to Belarus'

By Reuters,

Russia's gas exports monopoly Gazprom will almost halve supplies to Belarus from Friday after failing to reach a deal with Minsk over a $456 million energy debt, Gazprom said on Wednesday.

The world's largest gas producer, which supplies a quarter of Europe's gas, reassured the rest of Europe it would continue to pump gas exports across Belarus. It said it planned to notify its customers in over 20 European countries about the move. "We will cut supplies by 45 percent but fully maintain our transit supplies to Europe via Belarus," Gazprom's spokesman Sergei Kupriyanov told Reuters.

"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," he added.

The statement echoed previous disputes between Russia and its neighbours, Belarus and Ukraine, which led to substantial gas and oil supply reduction to Europe, underlying its heavy dependence on Russian energy resources.

During previous disputes, 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 cold winter months. "We are in the middle of summer now, so the situation is different," said Kupriyanov.

A spokesman for Belarus' energy ministry confirmed it had received the warning and declined to say whether a quick deal could be reached to resolve the dispute. "Talks continue. But we are not ready to say anything concrete. But if Gazprom warned us about the cut, you can take that to mean that we were not able to reach a deal by the deadline," he said.

Belarus has asked Russia for more time to pay the bill and is seeking to borrow money from Moscow, even though economists and officials reckon Minsk has enough cash on hand to cover the cost of dearer energy imports. Gazprom more than doubled prices at the start of the year after a long pricing dispute with Minsk.

That row was eventually resolved on terms that Belarus' long-serving president and -- until recently - pro-Moscow loyalist, Alexander Lukashenko, has since fiercely criticised. Belarus now must pay $100 per 1,000 cubic metres of Russian gas - up from the old price of $46 that was heavily subsidised by Moscow - but was given a six month grace period during which it was allowed to pay half the price. Belarus has signed a contract to import 21.5 billion cubic metres of gas from Russia this year, including 10 bcm in the first half.

Source:

http://www.ft.com/cms/s/4adfda24-400e-11dc-9d0c-0000779fd2ac.html