BELARUS NEWS AND ANALYSIS

DATE:

04/08/2007

Russia cancels gas cut-off to Belarus after payment

By Stephen Boykewich

AFP

MOSCOW

Russia and Belarus narrowly averted another energy crisis on Friday, reaching a last-minute agreement to cancel threatened cuts in Russian gas shipments that had rattled European nerves.

Russian gas giant Gazprom backed down from a threat to slash gas supplies by almost half to Belarus, a key energy transit state to western Europe, after Belarus began repayment of nearly half a billion dollars in overdue debt for past supplies.

"Today Beltransgaz has made the first payment for a significant part of the debt it owes Gazprom... The decision has been made to put off a reduction in gas supplies to Belarussian consumers," Gazprom said in a statement.

Belarussian gas pipeline operator Beltransgaz told AFP it had paid 190 million dollars to Gazprom out of a total of 456 million dollars (333 million euros) in overdue debt.

Gazprom said in a statement it expected "full repayment of the debt within one week, and prompt payment of 100 percent of current gas bills."

Gazprom spokesman Sergei Kupriyanov warned, however, that supplies could be cut next week if further payments were not made.

"If additional payments are not made within a week, we will decide to reduce deliveries in accordance with the payment we have received, which is to say by 30 percent," he told Echo of Moscow radio.

The incident was the latest stand-off between Russia and one of its ex-Soviet neighbors to raise fears of supply cuts among western European consumers, who receive 20 percent of their Russian gas via Belarus.

European consumers briefly saw shipments of Russian oil fall in January, when Moscow cut off shipments through a Belarussian oil pipeline.

A similar dispute over gas prices between Russia and Ukraine, another key transit country, prompted cut-offs last year that hit supplies to western Europe and sparked a wide debate about growing reliance on Russian energy.

The European Commission welcomed the apparent resolution on Friday, saying it was scrapping plans to convene the EU's gas coordination group over the clash.

"We welcome the development over the past hours," said Commission spokesman Martin Selmayr. "There is no longer the need to call an urgent meeting of the gas coordination group."

Belarussian President Alexander Lukashenko said Thursday that Minsk would pay the full sum from national currency reserves, while slamming Russia for what he characterised as strong-arm tactics to gain Belarussian energy assets.

"Russia doesn't just want to privatise a few enterprises, it wants to take them for free. They want to privatise the whole country," he said.

Minsk and Moscow have repeatedly clashed in recent years as Gazprom has sought control of Belarussian gas infrastructure and Belarus has tried to hold on to steep subsidies for Russian gas.

Gazprom more than doubled gas prices to Belarus to 100 dollars (73 euros) per 1,000 cubic meters on January 1, and in May, it won a deal to acquire 50 percent of Belarus' national pipeline operator for 2.5 billion dollars

Source:

http://www.petroleumworld.com/story07080605.htm