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Gas row continues unabated, Lukashenko threatens Russia with cut-off
Published: 25 June, 2010, 14:49
Edited: 06 July, 2010, 00:41
Belarusian President Aleksandr Lukashenko has called for a cut-off of Russian transit gas via the country’s territory despite payments made on Thursday, and is now threatening to cut off oil transit as well.
Looks like Lukashenko is winning.
Ok now we are onto the backdating clause. Basically at what point will the new negotiated price take effect for transit. This is great stuff, it really wraps up all the issues of what you get into, when you have money flows and set off and where people think some negotiations have moved to being contractual obligations, while others not. Don't you think with all the Lawyers these guys have, they could have avoided this. Hope the new paperwork is better!
This was all about prices and enforcing them. What was happening was that there were debts both ways, and Belarus wanted to decide how they were offset, basically setting its own Gas and transit fees. It decided on the Net debt after its calculation. This also had the additional benefits of cashflow reduction and possible foreign exchange aquisition. In this situation Gazprom had to force actual transactions, representing actual contractual amounts . Exact payment from Belarus against contracted Gas, exact payment to Belarus against contracted transit. These had to be fully reconciled transactions to make it work. The net effect is that Belarus is not happy, because it cannot set the parameters of the deal as it wanted to. Effectively it couldn't vary the contract as it wished. Now the game moves onto Belarus trying to get those variations in the contract by other means, in this case blackmail.