Belarus stops gas transit to the West

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Belarus President Alexander Lukashenko yesterday (22 June) called a halt to gas flows to Lithuania, Poland and Germany following a payment dispute with Russian monopolist Gazprom, speaking of a "gas war," the press in the region reported.

Lukashenko, known as 'the last dictator in Europe', stopped the transit through his country of Russian gas destined for the West, calling on Gazprom to pay $260 million in gas transit fees for the first half of the year. Gazprom owns the pipeline that carries its gas through Belarus.

"I want to inform you about the conflict that, unfortunately, is growing into a gas war between Gazprom and Belarus," Lukashenko told Russian Foreign Minister Sergei Lavrov in Minsk, as quoted by the Moscow Times.

Earlier on Tuesday, Gazprom reduced supplies to Belarus to 70% of the country's needs, increasing the pressure on its neighbour (see 'Background').

Gazprom insists that it is seeking $192 million in unpaid debts after Belarus refused to pay a higher price for the Russian gas it consumes.

Gazprom set prices for Belarus at $169 per 1,000 cubic metres for the first quarter of the year and $185 for the second quarter. Instead, Minsk has been paying $150, RIA Novosti writes.

Gazprom recognises that it owes Belarus $260 million in transit fees.

"We do not owe Gazprom. Gazprom owes Belarus $70 million if any debt is to be offset," Lukashenko said.

No gas for cheese

On Monday Lukashenko acknowledged the debt and proposed to repay it with machinery, equipment and a variety of other goods.

But Russian President Dmitry Medvedev responded by saying that Gazprom could not receive payment for the debt in "pies, butter, cheese or other means of payment".

Lukashenko said Belarus was offended by Medvedev's remarks.

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

But he said he had found the money to pay Belarus's debts.

"I borrowed the money from my friends today and will pay as soon as possible."

European Commission spokesperson Marlene Holzner said the EU executive had received a letter from Russian Deputy Prime Minister Igor Sechin clarifying the situation with Belarus transit.

She said that if Belarus were to cut gas deliveries to the EU, Lithuania, which fully depends on gas deliveries via Belarus, would be most affected. Poland and Germany would be affected indirectly.

Holzner added that if Lithuania did not receive Russian gas for a week, gas would be delivered from neighbouring Latvia.

Holzner also said that the Commission was calling an emergency meeting to discuss the gas row.

Buzek: Early warning did not work

"The early warning mechanism between Russia and the EU did not work this time," Parliament President Jerzy Buzek said yesterday during a meeting in Moscow with Russian Energy Minister Sergei Shmatko.

The early-warning mechanism was set up on the EU's initiative following the January 2009 gas crisis, when a payment dispute between Gazprom and Ukraine cut supplies of Russian gas to some EU countries.

Shmatko said Russia had alerted the Commission about possible gas supply problems on Saturday and Polish companies were yet to report a fall in pipeline pressure.

"The conflict does not affect Poland in any perceptible way. For now, the pressure in the Yamal pipeline has not fallen," Polish Prime Minister Donald Tusk was quoted as saying yesterday.

In a statement, Gazprom states that under 'force majeure' circumstances, the company would seek alternative routes to bring gas to its European consumers.

"Amongst other actions, the company will increase deliveries through Ukraine. Kiev already confirmed its readiness to increase the transit of gas through the Ukrainian transportation system," the text reads.

"European customers will get all the contracted gas volumes. Gazprom is making every effort to have this issue resolved within days, if not hours," the statement concluded.

The secretary-general of the Energy Charter, Ambassador André Mernier, expressed his concern about the Belarus gas row.

He brought to attention the principle of uninterrupted transit, which is a core element of the Energy Charter Treaty.

"In accordance with Article 7(6) of the Treaty, a Contracting Party through whose Area Energy Materials and Products transit shall not, in the event of a dispute over any matter arising from that transit, interrupt or reduce, permit any entity subject to its control to interrupt or reduce, or require any entity subject to its jurisdiction to interrupt or reduce the existing flow of Energy Materials and Products. The Treaty foresees a special dispute resolution procedure involving a conciliator. Throughout this procedure the parties are to keep energy transit flows unchanged," Mernier said in a statement.

Russian President Dmitry Medvedev told the gas monopoly Gazprom to cut gas supplies to Belarus by 15% on 21 June, pressing its neighbour to pay mounting debts and raising fears of disruptions to deliveries to Europe (EURACTIV 21/06/10).

Russia supplies a quarter of Europe's gas needs and uses Belarus, which borders European Union member Poland, as one of two key transit routes for oil and gas to the continent. Some 20% of the Russian gas exported to the EU crosses Belarus.

Russia-Belarus relations have soured since they failed to agree unified customs rules and Minsk gave refuge to ousted Kyrgyz President Kurmanbek Bakiyev, despite Moscow's support for the new Kyrgyz leadership.

Politicians in the European Union and the United States have repeatedly accused Russia of using its vast energy resources to bring its neighbours to heel, though Moscow says it is simply trying to secure market prices for its energy supplies. 

Several EU countries were badly affected by the January 2009 gas crisis, when Russia stopped supplying gas to Ukraine over a payment dispute (see EURACTIV LinksDossier on 'Pipeline politics').

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