Russia extends gas cuts to Belarus

08:37, June 24, 2010      

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Russia Wednesday cut gas supplies to Belarus by 60 percent as a payment feud between the ex-Soviet neighbors that has raised fears for European consumers went into a third day.

But despite threats from maverick Belarussian leader Alexander Lukashenko that he was shutting down transit of Russian gas to Europe, Russian state gas giant Gazprom said gas was flowing normally.

"We have two pieces of news. One is good, the other is bad," Gazprom chief executive Alexei Miller told state television.

"Transit of Russian gas through the territory of Belarus is being implemented in the full amount and consumers of Russian gas do not experience any problems with it."

"The bad news is the Belarussian side is undertaking no action to settle the debt for Russian gas supplies," he said, noting his company had moved to limit supplies by 60 percent from Wednesday morning and the cuts would continue in proportion to Belarus' debt.

The dispute centers on Belarus' refusal to accept a hike in the price it pays for Russian gas from the $150 per 1,000 cubic meters it paid on average last year to $169.2 in the first quarter of this year and $184.8 in the second quarter.

Later Wednesday Gazprom said Belarus had paid $260 million at full price for gas supplies in May, but added that Minsk must also "immediately" cover $192 million in arrears.

After Minsk said it saw no reason for price hikes since the two countries had been working to ramp up economic cooperation, Gazprom Monday reduced gas supplies to Belarus by 15 percent and then by 30 percent Tuesday.

Belarus for its part says Gazprom owes it more than $200 million in transit fees.

The gas giant has said it would incrementally reduce gas supplies up to 85 percent of the normal volume if the debt is not settled in the coming days.

Following Tuesday's cut, Lukashenko ordered a shutdown of Russian gas transit deliveries to Europe, raising fears in the European Union, whose members Lithuania, Germany and Poland depend on Russian gas piped through Belarus.

Gas supplies via Belarus to Lithuania and the Russian Baltic territory of Kaliningrad fell 40 percent Wednesday, Lithuania's national gas firm said.

The EU has called on Minsk and Moscow to respect their contractual obligations.

Analysts say the dispute has been sharpened by Lukashenko turning away from reliance on the Kremlin and pursuing closer ties with the EU.

Source: Global Times


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