BELARUS NEWS AND ANALYSIS

DATE:

27/12/2006

Belarus Warns It Will Stop Russian Gas Deliveries to Europe

MosNews

Belarus has issued an implicit threat that it could stop Russian gas deliveries to Western Europe through its pipeline system unless Russia's state-controlled gas giant Gazprom relented on its demands of a higher price it wants to charge Belarus.

"We are inter-dependent. If I don't have a domestic gas supply contract, Gazprom won't have a transit deal," the country Deputy Prime Minister Vladimir Semashko said at Minsk airport late on Tuesday, Dec. 26, after his return from failed talks in Moscow. "I think Gazprom should give a signal and come to Minsk. It's their turn now," he added, quoted by Reuters.

Semashko did not say whether Belarus was prepared to stop all gas transit via its territory. Two years ago, the country took no such action in a similar dispute but Gazprom accused it of taking gas from transit pipelines for its domestic needs.

Gazprom said on Tuesday the latest round of talks with Belarus on 2007 prices had ended without agreement. But it said customers in Western Europe were safe as it had stockpiled gas in Germany, Austria and the Baltic States to guard against possible cuts.

Relations between Russia and its former ally Belarus have soured ahead of the New Year deadline, reviving memories of last year's cutoff of supplies to Ukraine which reduced flows to Europe in the first days of January. Gazprom still hopes for a deal to allow Belarus to receive gas and Gazprom to transit gas to Poland and Germany.

Gazprom has repeatedly warned Belarus it has to pay higher prices from 2007 and share control of its pipelines with the Russian firm or face reduced supplies from the New Year.

Gazprom, the world's largest gas producer, supplies a quarter of Europe's gas needs. The cutoff to Ukraine prompted European leaders to raise concerns over reliance on Russia.

Belarus is also a supply route, with smaller volumes. Poland and Germany get some 30 billion cubic meters of gas via Belarus each year, while Ukraine ships over 100 billion cubic meters to some 20 European states.

Gazprom says it offered major concessions to Belarus. Belarus now pays $46.7, or as much as consumers in Russia. By comparison, Gazprom will charge Moldova $170 in 2007 and Georgia $235, while consumers in Europe pay over $250. Gazprom has suggested that Belarus could pay $75 per 1,000 cubic meters in cash and $30 per 1,000 cubic meters in shares of Beltransgaz, the country's gas pipeline monopoly. However, the only thing that Belarusian authorities agree to is to continue paying $45 in cash and to pay another $30 in shares.

Semashko said he did not believe Gazprom would made good on its threat and cut gas supplies from January. "It will prove to be an unreliable supplier. That would damage Gazprom's reputation," he said.

Source:

http://www.mosnews.com/money/2006/12/27/belarusthreat.shtml