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24 Jun, 2010 17:29

Belarus and Gazprom paper over the cash cracks

Belarus has paid off its debt to Gazprom for supplies of Russian gas, with Moscow resuming deliveries in full, and the Russian monopoly gas exporter has paid its transit debt. But issues between the two remain.

The debts are paid, the gas supply resumed, consumers not affected. However, the reassuring news does not mean the end of it. Issues remain unresolved between Russia and Belarus according to Gazprom CEO, Aleksey Miller.

“We've received a letter from the Belarussian first deputy prime minister requiring Gazprom to pay for the transit of Russia's gas via Belarus that's not according to the terms of the contract and threatening to stop the transit if the payment is not made.”

More than that, Miller added, Belarus has siphoned off Russia's export gas being shipped across the country.

“On Wednesday the planned volume of export shipments was reduced by up to 20% because Belarus had meddled with the export pipe.”

According to Gazprom the problem with transit fees stems from an in principle agreement to move to higher transit prices last year, but with the move to coincide with Belarus moving to higher domestic prices, which Gazprom says hasn’t happened. It adds that it has been paying under existing contracts, and that it has sent new contract documentation to Belarus.

However, Aleksandr Nazarov, Senior Oil and Gas Analyst at IFC Metropol says the real issue now between Russia and Belarus may even not be directly connected with gas but, rather, with the Belarussian refineries.

“The Belarussian refineries now are probably the largest and last interesting assets for Russian large business in Belarus. So probably the dispute is over the price, or the process of privatization of these assets.”

Analysts expect the hot rhetoric to continue. But the upside for both parties and consumers is that it's taking place in high summer when demand for gas is at its lowest, and downstream users are least affected.