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22 Jun, 2010 11:40

Gas transit stopped as debt imbroglio spreads

Belarusian President Aleksandr Lukashenko has ordered a halt to the transit of Russian gas through his country until Gazprom pays of its transit debt.

“I have ordered the government to suspend the traffic of Russian gas through Belarus until Gazprom pays the debt for the transit,” said Lukashenko in a meeting with Russian Foreign Minister Sergey Lavrov.

On Monday Russia began cutting gas supplies to Belarus due to an outstanding $200 million debt for gas.

Lukashenko also proposed conducting a mutual settlement of the Belarusian debt and Gazprom’s transit debt.

“We will give you $192 million and you will give us $260 million, make a mutual settlement and pay us the difference. And we will close this issue.”

Rusenergo analyst and partner, Mikhail Krutikhin told RT Business that the summer season means that European consumers will not be too affected by the halt in transit.

“Ukraine has enough reserves in the underground storage facilities. I don’t think this is very dangerous for European consumers.”

However, he added that the problem could be around for a while as it has gone from business to politics.

“Each of the sides admitted that the debt exists, but now it has become political. I think it was possible for a debt swat, but maybe Gazprom is trying to show that Belarus is not a reliable transit territory.”

He added, “It will take some political will from the heads of state to solve this issue.”