Russian Gazprom threatens new gas war with Belarus (Roundup)

Aug 1, 2007, 19:40 GMT

Moscow/Minsk - The Russian energy giant Gazprom Tuesday accused Belarus of failing to pay for energy delivered, and threatened to cut off natural gas to the former Soviet republic.

If carried out, the move would almost certainly reduce natural gas deliveries to Europe, and increase European prices for the fuel, as Europe receives some 25 per cent of its natural gas from Gazprom.

A statement from the Russian natural gas monopolist warned the Belarusian government it intended to reduce deliveries to Belarus to 45 per cent of present volumes.

Russia's largest corporation, Gazprom said the cut was necessary because Belarus' government had only paid for the value of gas received from Russia from January through June, by roughly the same 45 per cent amount.

The Belarusian debt to Gazprom for the six-month period is reportedly 456 million dollars, according to the company. The cut will go into effect on August 3, the Belapan news agency reported.

A similar dispute between Gazprom and Minsk at the beginning of 2007 over oil pricing reduced Russian oil deliveries to Europe for more than a week, spiking the price of the fuel across East Europe and even as far away as Italy.

'We have serious concern...and we call on both sides to resolve this dispute as soon as possible,' said Martin Selmayr, spokesman for the European Union, at a Brussels press conference.

The last agreement between Gazprom and the Belarusian government on natural gas pricing was signed at the end of 2006, only hours before Gazprom was due to shut of deliveries completely.

Belarus was considering an official response to the apparent Gazprom ultimatum, and hoped for a peaceful resolution of the dispute, said Andrei Zhukov, Belarus Vice Energy Minister, according to Belapan.

Aleksander Lukashenko, Belarus' authoritarian leader, has been hard put to maintain growth many of the country's manufacturing sectors, which depend on subsidised Russian gas to remain competative.

As part of a deal to retain access to cheap Russian fuel, he approved the sale of a 12.5 stake of Beltransgaz, the Belarusian natural gas pipeline company, to Gazprom - despite earlier repeated declarations he would never let Beltransgaz come under foreign control.

Viktor Babariko, chairman of the Belarus state-own Belgazprombank, told reporters Minsk had a variety of ways it could pay off the debt, including sale of governement gold reserves, partial transfer of Beltransgaz shares to Gazprom control, and use of Beltransgaz shares as loan collateral.

Further concessions by Lukashenko leading to a greater Gazprom stake in the Beltransgaz, are a likely eventual outcome of the dispute, even if a cut-off is avoided, observers said.