Russia-Belarus energy feud rumbles on despite payments

24th June 2010, Comments 0 comments

Russian gas giant Gazprom resumed gas flows to Belarus on Thursday after Minsk settled its debt, but the bilateral energy feud rumbled on as Belarus threatened to cut off transit to Europe.

Gazprom said it had restarted gas supplies to Belarus after Russian President Dmitry Medvedev had been informed by Gazprom chief Alexei Miller that Belarus had covered payment arrears of nearly 200 million dollars.

"There are currently no problems that would hinder gas transit and gas supplies to Belarus," Gazprom spokesman Sergei Kupriyanov said in televised comments.

Gazprom said it had also paid 228 million dollars to Belarus for gas transit.

But in Belarus, authorities refused to confirm they had received a full payment for transit fees and threatened to halt transit from 1000 GMT.

Belarus says Gazprom owes it 260 million dollars in gas transit fees. Its energy minister Alexander Ozerets said in televised remarks that Gazprom's payment had represented only 87 percent of Russia's outstanding debt.

Earlier in the day, however, Belarussian gas pipeline operator Beltransgaz said it had received payment from Gazprom and that ties between the two sides were improving.

"Gazprom has paid. The money from Gazprom has arrived," Eduard Urban, an aide to Beltransgaz general director Vladimir Mayorov, told AFP. "Ties are getting back on track."

Gazprom owns a 50 percent stake in Beltransgaz.

Russia's latest dispute with Belarus's maverick leader Alexander Lukashenko erupted Monday when Gazprom cut its gas supplies by an initial 15 percent.

It had said it would incrementally ramp up cuts to 85 percent of the normal volume in proportion to the outstanding debt. It cut supplies by 30 percent on Tuesday and by 60 percent on Wednesday.

Following Tuesday's cut, Lukashenko ordered a shutdown of Russian gas transit deliveries to Europe in retaliation, raising fears in the European Union, wheree member states Lithuania, Germany and Poland take Russian gas piped through Belarus.

The payment dispute claimed its first European victim on Wednesday when EU member Lithuania said it had suffered 40 percent reduction in gas pumped through Belarus and EU Energy Commissioner Guenther Oettinger called the dispute an "attack" on the whole European Union.

Russian Prime Minister Vladimir Putin, speaking from the mining city of Novokuznetsk, expressed regret that the dispute had soured Russia's ties with a former Soviet republic with which Moscow has traditionally enjoyed a strong relation.

"The Belarussian partners are receiving Russian natural gas at the lowest prices -- no consumer -- no one -- pays lower prices for Russian natural gas," Putin told officials.

"The situation on the whole is highly deplorable because the conflict arose with the republic, the country with which Russia has special relations," he added in televised remarks.

The dispute centres on Belarus' refusal to accept a hike in the price it pays for Russian gas from the 150 dollars per 1,000 cubic metres it paid on average last year to 169.20 dollars in the first quarter of this year and 184.80 dollars in the second quarter.

Belarus says it sees no reason to accept a price hike since the two neighbors are working to ramp up their economic cooperation.

Lukashenko is also bitter that Russia earlier this year offered Ukraine a discount of around 30 percent on Russian gas imports, with those subsidies effectively worth 40 billion dollars over the next 10 years.

In recent months Russia and cash-strapped Belarus have often been at loggerheads over energy prices and customs duties, but the latest dispute is the fiercest feud yet between the two ex-Soviet neighbors.

© 2010 AFP

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