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Belarus to stop supply to Europe in "gas war" with Gazprom

22 June 2010 23:18 (UTC +04:00)

MINSK TO SHUT DOWN GAS TRANSIT

Belarusian President Alexander Lukashenko told visiting Russian Foreign Minister Sergei Lavrov in Minsk Tuesday he had ordered the closure of the gas transit to Europe via Belarus, "until Gazprom pays the debt for the transit."

"Until they pay for the last six months, there will be no gas transit," Lukashenko said.

According to the Belarusian leader, Russian energy giant Gazprom owes his country 260 million U.S. dollars for transit fees to Europe, and Minsk owes the company 190 million dollars because of the difference between the gas price it has paid and the originally agreed price in the contract.

"It is absurd that we are not paying off this debt," he said. "Unfortunately, the gas row is becoming a gas war between Gazprom and Belarus."

One day earlier, when Lukashenko offered to pay back the due debt in machinery, equipment and other goods, his Russian counterpart Dmitry Medvedev dismissed the suggestion with scorn, saying Gazprom could not receive payment in "pies, butter, cheese or other means of payment," only in currency, RIA Novosti news agency said.

Apparently offended, Lukashenko on Tuesday said, "We take it as an insult when we are lowered to the level of chops, sausages, butter and pancakes."

He, meanwhile, said his country had found money and would pay for the Russian gas "soon," but the money was borrowed from his friends since the country had no free money to pay off the debt.

Belarusian state gas company Beltransgaz earlier on Tuesday said it would siphon off Russian gas supplies to Europe for its own need, the RIA Novosti reported, citing Belta agency.

The move followed Russian Gazprom’s further cut of gas supplies to Minsk on Tuesday by 30 percent, up from Monday’s slash of 15 percent, over the debt of some 200 million dollars for gas Belarus consumed.

However, according to a spokeswoman from Belarusian Energy Ministry, full transit of Russian gas to Europe through Belarus had not stopped.

Lyudmila Zenkovich said Belarus did not tap gas from its transit pipeline but had to switch a number of its power plants to reserve fuel.

Belarusian Deputy Energy Minister Mikhail Mikhadyuk also said the transit was still working, and the suspension was being worked on.

RUSSIA REMAINS TOUGH IN STANDOFF

In quick response to Lukashenko’s order, Kremlin spokeswoman Natalya Timakova said Tuesday that Medvedev "has given all the necessary instructions" to Gazprom and others in response to the Belarusian blocking of the gas, in a telephone conversation with Gazprom CEO Alexei Miller.

Despite Minsk’s urging that the debt be offset, Russia insisted on instant payment of the debt.

Gazprom spokesman Sergei Kupriyanov told a press conference in Moscow the only way to solve the ongoing gas debt dispute between Russia and Belarus would be Minsk paying off the debt as soon as possible.

Kupriyanov said it was unrealistic for Minsk to ask for debt to be offset against transit fees, since the two were totally different issues.

Gazprom deputy CEO Alexander Medvedev, meanwhile, said the company was ready to jointly monitor transit across Belarus with European observers, "to assess who is doing what and who is violating what."

"We will do everything we can to ensure that our European consumers are not affected," he said, adding that Gazprom would continue to cut gas supplies if Minsk failed to take any measures to solve the debt issue.

Kupriyanov said Gazprom was studying ways to deliver gas supplies bypassing Minsk, in order to completely satisfy consumer demands from Europe and Russia’s western enclave of Kaliningrad and negating the threats to block supply.

"We have already received confirmation for Ukraine’s (gas transport) system readiness from Kiev. We plan to use gas from underground storage facilities and possibly spot markets. Kaliningrad customers will be provided with gas via Lithuania. All the customers will receive their full gas volume," said the spokesman on a Russian TV channel.

EUROPE WORRIED

Caught in the gas row, the European Commission, the executive arm of the European Union, was mulling over an emergency meeting to settle the gas debt disputes.

The RIA Novosti reported Commission spokeswoman Marlene Holzner saying the Commission would hold a working meeting with Belarus.

Holzner said earlier Tuesday the gas cuts might affect 6.25 percent of consumption volumes of the European Union.

Spokesman for the European Commission Delegation in Moscow Denis Daniilidis told the Interfax news agency Tuesday the European Union was also exploiting alternative routes to import natural gas from Russia bypassing Belarus.

Holzner on Monday said Lithuania, which fully depended on gas deliveries via Belarus, would be most affected following the gas suspension. Poland and Germany might also be indirectly affected.

Belarus is a transit country for part of Russian gas exports to Europe. A similar dispute between Moscow and Kiev early last year left some European countries short of heating fuel in deep winter.