BELARUS NEWS AND ANALYSIS

DATE:

02/08/2007

Pay $456m now or we cut your gas, Gazprom warns Belarus

Tom Parfitt in Moscow
The Guardian

Russia's Gazprom gas monopoly has threatened to halve supplies to Belarus tomorrow in a payment dispute that could disrupt deliveries to western Europe.

Moscow said yesterday it would cut by 45% supplies flowing to its neighbour through export pipelines - which also carry gas to Germany, Poland and Ukraine - if Minsk did not pay debts of nearly $500m (?250m) by 10am on Friday.

Gazprom said exports to the European Union would not be affected but it is feared that Belarus may replace its deficit by siphoning off gas in transit.

Russia cut off supplies to Ukraine for several days in what became known as the "gas war" in January last year and has since tussled with other former Soviet states over prices and transit fees. The Kremlin insists prices are set by market forces but critics accuse Moscow of wielding its energy reserves as a political weapon.

Belarus's close ties to Russia have traditionally ensured it has cheap supplies. Its price was more than doubled from $47 per 1,000 cubic metres to $100 at the end of last year but remains much lower than that paid by other European clients. However, Minsk has failed to pay a $456m bill for supplies in the first half of this year.

Russia's first deputy prime minister, Dmitry Medvedev, said on Monday that any deal had to be based on "economic principles". He said: "Belarus is in debt. There is nothing dramatic about that. There are negotiations in progress ... I hope this knot will be untied very soon."

A Gazprom spokesman, Sergei Kupriyanov, said he hoped Belarus would live up to its obligations not to tamper with transit supplies destined for other countries.

But some states fear a cut in deliveries if Russia reduces pressure in its pipelines. Poland's economy minister, Piotr Wozniak, said: "We can't accept suggestions that our supplies could suffer due to a dispute between Gazprom and Belarus."

Industry sources said Moscow was using the debt issue partly as leverage to persuade Belarus to allow Russian companies to take part in lucrative privatisations.

The European commission said it was taking the issue "very seriously" and urged both parties to resolve the dispute.

In a deal last year Belarus agreed to sell half of its state gas firm, Beltransgaz, to Gazprom for $2.5bn but Minsk has not used the money to pay off its gas debt.

Source:

http://www.guardian.co.uk/russia/article/0,,2139809,00.html?gusrc=rss&feed=networkfront