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22 Jun, 2010 06:51

Belarus president orders Russian gas transit to Europe halt

Belarus President Aleksandr Lukashenko has ordered the government halt the transit of Russian gas to Europe until Gazprom pays off its existing debt for gas transit, according to Itar-Tass news agency.

The European Commission will gather with Russian and Belarusian representatives for an urgent session on Tuesday, EU energy spokeswoman Marlene Holzner said.

More than six percent of EU gas consumption could be at risk because of the row between Russia and its neighbor Belarus, she underlined.

Speaking about President Lukashenko’s order to cut transit gas flow to European customers, Holzner said, they received no official information on the matter.

Russia’s President Dmitry Medvedev has already given all the necessary orders to Gazprom’s management regarding Belarus’ actions.

Gazprom says it is considering alternative routes for its European energy supplies.

Lukashenko made the announcement at a meeting with Russian Foreign Minister Sergey Lavrov.

Gazprom's debt to Belarus for gas transit to Europe was created artificially because Belarus has not signed the gas transit act, Gazprom spokesman Sergey Kupriyanov said on Monday.

“Yes, there is a debt. Belarus is not signing a document about completed work and this prevents us from paying off this debt,” Kupriyanov admitted.

The two sides met in Moscow in an attempt to reach an agreement. Belarus recognized its $200 million debt, but refused to repay the sum in cash, instead offering payment in machinery, equipment and other commodities.

The Russian president said such an offer was unacceptable and that a conventional payment must be made.

The cut started with a 15% reduction and will be raised to an 85% decrease in the supply volume. It currently sits at 30%.

“Belarus has taken no actions to clear the debt, so the company introduced restrictions starting 10:00 Moscow time [Tuesday], to 30% of daily supplies with further restrictions, in accordance with the outstanding debt,” Gazprom CEO Aleksey Miller told Rossiya 24 news channel.

President Lukashenko said he borrowed the money necessary to pay to Gazprom “from his friends”, and the debt will be soon paid off.

At the same time, he offered Gazprom a debt swap, saying that while Belarus’ debt to Gazprom is $192 million, and Gazprom’s debt to Belarus is $260 million, Gazprom must just pay off the $70 million difference.

Before that Belarus promised to pay up in two weeks. Moscow keeps insisting that Belarus pays off the debt as soon as possible.

“Nobody will wait for two weeks,” Sergey Kupriyanov said. The May payment deadline is June 23.

Sergey Kupriyanov noted that the debt may increase rapidly, as Belarus pays just $150 per 1,000 cubic meters, while the contract price is $184. With the monthly export totaling around 1.4 billion cubic meters, the debt may reach $260-270 million by the end of June.

On Tuesday Belarus threatened to start siphoning off gas from the transit pipeline.

According to Sergey Kupriyanov, Gazprom received a corresponding letter from Belarus’ first deputy prime minister Vladimir Semashko. The letter does not yet contain “any concrete suggestions on paying off Belarus’ debt,” Kupriyanov added.

Earlier Moscow promised the restrictions will not affect its European consumers, as Gazprom has a backup plan under which greater volumes of fuel may be pumped through Ukrainian territory.

Russian Prime Minister Vladimir Putin expressed hope that supplies to European countries will not have to be re-routed.

“Technically, Belarus would be able to siphon off the gas transited through its territory. In this case we are able to re-route these streams to other hubs, including Ukraine. But I hope we won’t have to resort to that,” Putin said.

“We have the ability to pump out to 30 billion cubic meters of additional gas,” said Ukrainian Prime Minister Nikolay Azarov. “If it’s necessary, the Ukrainian gas transit system will help maintain above all European gas deliveries.”

In such a complex situation, Russia maintains good communication with its European counterparts, said Russian Energy Minister Sergey Shmatko.

“We are keeping in touch with our European colleagues,” he told RT. “Today I have been talking to the European commissioner in energy, Mr. Oettinger, who has given a good assessment of our communication in these uneasy times. He said that Russia, despite the tensions, is doing all that is necessary to secure European deliveries.”

Political analyst and journalist for RIA Novosti news agency Dmitry Babich is convinced that Lukashenko has the money.

“It's just Lukashenko's political style. First he says he is going to cut supplies to Europe; then he says: we found the money, I borrowed it from some of my friends. The amount – $192 million – is relatively small if we bear in mind that just last year Moscow and Brussels gave loans worth several billions to Belarus. My understanding is that Lukashenko has the money, but is very unwilling to pay it,” Babich told RT.

Europe remembers last year’s gas dispute between Russia and Ukraine and fears the current situation may again go sour. But former European MP and RT contributor Giulietto Chiesa says there’s little chance of a repeat.

“This dispute is not at all similar to that between Russia and Ukraine,” he said. “Ukraine was not at all a friendly country with Russia, while Belarus and Russia have good strategic relations.”

Dmitry Aleksandrov from the Univer Investment Group says this dispute is unlikely to harm ties between Russia and the European Union.

''This dispute over the payment for gas will not affect relations between Moscow and Brussels. There is a stand-off towards Minsk from the European Union. Aleksandr Lukashenko failed to bring Belarus closer to the EU and this, to some extent, gives Moscow carte blanche to act strongly. Possibly, it's the reason the situation has become so tense,'' Dmitry Aleksandrov says.

However the situation can really have a negative impact on relations between Russia and Belarus, and there will be no winners, believes Kirill Koktysh from the Moscow State University of International Relations. Besides, the date of the signing of the Customs Union Treaty between the two, along with Kazakhstan, is looming and “Belarus loses time to work out good conditions for it joining the union,” Koktysh said.