BELARUS NEWS AND ANALYSIS

DATE:

02/08/2007

Belarus threatens Russian gas

Isabel Gorst, Moscow

GAZPROM yesterday threatened to start halving its gas exports to Belarus from today in an attempt to force the country into paying a $US456million ($535million) debt to the Russian state-owned gas monopoly.

The move poses a threat to other countries supplied by Gazprom, as Belarus is an important transit route for Russian gas exports to Europe.

But the company said there would be no repeat of the reductions in European gas deliveries that took place during a price dispute with Ukraine in January last year that rocked confidence in Russia's reliability as an energy supplier.

Gazprom's head of communications, Ilya Kochevrin, said: "We will cut supplies to Belarus by 45 per cent if they don't find a way to pay for gas delivered in the past six months. However, we will make sure that all our (European) customers get all their gas in the full amount."

Gazprom doubled the price it charges Belarus for gas in January as part of a strategy to eliminate subsidies to former Soviet republics. The debt crisis erupted last week following the expiry of a six-month grace period, which allowed Belarus to delay paying the new $US100 per thousand cubic metres price.

Mr Kochevrin said Gazprom did not expect Belarus to siphon gas from transit lines during the summer months but said Belarus was "unpredictable".

Gazprom will consider international arbitration if Belarus fails to pay its bill.

Belarussian transit pipelines serving Poland, Lithuania and Germany handle about 20 per cent of Gazprom's total exports to Europe, far less than the Ukrainian route.

Gazprom said it had notified the European Union and all its European customers about the dispute with Belarus.

Analysts said Gazprom had increased stocks in recently acquired European gas storage facilities to guard against any unexpected supply shortfall.

Vladimir Milov, president of the Institute of Energy Policy, an independent Moscow-based consultancy, said: "It doesn't matter who is right or who is wrong in this dispute. The threat to cut off supplies will once again damage the image of Russia as a player on world energy markets."

Gazprom last year started building an export pipeline from northwest Russia across the Baltic Sea to Germany to take gas into Europe without crossing any foreign state.

Source:

http://www.theaustralian.news.com.au/story/0,,22177784-36375,00.html?from=public_rss