Gazprom to Halve Belarus Gas Supply in Debt Row

Wednesday, 1 Aug 2007 | 5:17 AM ET

Russia's gas exports monopoly Gazprom will almost halve gas supplies to Belarus from Friday after failing to reach a deal with Minsk over a $456 million gas debt, Gazprom said on Wednesday.

"We will cut supplies by 45% but fully maintain our transit supplies to Europe via Belarus," Gazprom's spokesman Sergei Kupriyanov told Reuters.

"Belarus has so far offered nothing to resolve the debt issue, which we consider a violation of our previous agreements.

They have the money to pay back the debt and we do not understand why they don't want to do it," he added.

The statement recalled disputes between Russia and its neighbors, Belarus and Ukraine, which led to substantial gas and oil supply reduction to Europe, underlying its heavy dependence on Russian energy resources.

Belarus asked Russia for more time to pay the bill and is seeking to borrow money from Moscow, even though economists and officials reckon Minsk has enough cash on hand to cover the cost of dearer energy imports.

Gazprom more than doubled prices at the start of the year after a long pricing dispute with Minsk.

That row was eventually resolved on terms that Belarus' long-serving president and -- until recently -- pro-Moscow loyalist, Alexander Lukashenko, has since fiercely criticized.

Belarus now must pay $100 per 1,000 cubic meters of Russian gas -- up from the old price of $46 that was heavily subsidized by Moscow - but was given a six month grace period during which it was allowed to pay half the price.

Belarus has signed a contract to import 21.5 billion cubic meters of gas from Russia this year, including 10 bcm in the first half.


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