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23 Jun, 2010 06:56

Belarus gas dispute moves into third day

Gazprom has again turned down the volume of Russian gas flowing to Belarus, cutting deliveries by 60%, and is planning to re-direct gas supplies to Europe.

Around 6 percent of European gas deliveries may now be affected. Gazprom spokesman Sergey Kupriyanov says the company is looking at a range of options.

“It could be transit through Ukraine. Kiev has expressed the readiness to ensure transportation of additional amounts of Russian gas to Europe. In addition, gas may be taken from underground storage sites in Europe and from spot markets. Kaliningrad will be supplied with gas via Lithuania.”

Poland is the country most likely to be affected by the supply cuts. But Warsaw says it has plenty of reserves, and it would be able to cope with some disruption of supplies from Belarus.

The latest phase in the dispute started on Monday when Russia slashed gas supplies to Minsk over an unpaid $200 million gas debt. Belarus insists Gazprom owes an even bigger amount for transit fees.

Minsk has promised to pay its debt in two weeks, but has given no details about how this would be done. Lev Snykov of VTB Capital says the timing of the dispute is to Gazprom's advantage.

“The closer we are towards the end of the year, the more crucial the situation would be as fourth quarter the supplies should increase from a season standpoint. Consequently Gazprom is probably trying to preclude any further difficulties by raising this issue earlier rather than later when supplies should accelerate simply due to weather conditions. Currently the shortages in supplies can be covered by gas from underground storage facilities, and are less crucial because the seasonal consumption is low in Europe and in Belarussia itself. Consequently from this standpoint the timing for resolving this issue in such an abrupt manner is probably least problematic, both for Gazprom and for Beltranzgas.”

Russia' energy minister Sergey Shmatko says the current dispute with Minsk over energy payments will be short-lived with the energy systems of the two countries inter-dependent.

“As soon as Russia receives an invoice for transit of its gas, it will pay the transit fees. And correspondingly Belorussian debt should be repaid. I believe that we have a wide range of cooperation in the energy sphere. Our interests are very intertwined. We have just reached the understanding with Belarus on an intergovernmental agreement on coordinated work of our energy systems This agreement is expected to be signed shortly. A long term dispute with Belarus over gas would not be welcome.”