Russia Threatens to Cut Gas to Belarus

by Roman Kupchinsky

Russia’s Gazprom threatened to cut off gas deliveries to Belarus unless a debt of $244 million is repaid in July. The warning was issued by Gazprom CEO Alexei Miller who stated that “we have sent a letter demanding that the debt be paid, if not we shall act according to the terms of the contract. We can turn to the courts or we can reduce the volume of gas supplied.”

Gazprom officials told Kommersant Daily that Belarus owed $243 million for gas consumed from January-April and $10 million for late payment fines. Furthermore, Gazprom claims that Belarus received a total of $875 million for its sale of 12.5 percent of Beltransgaz, the owner of the Belarus gas pipeline, and for gas transit fees.

Belarus vice-premier Vladimir Semashko responded by saying that his country will only begin repaying the debt in July and will be able to pay the full amount by November. Semashko also noted that Belarus disputes the penalty charges of $10 million and will not pay them.

A large part of the misunderstanding stems from what was said and promised during a meeting between Belarus President Alexander Lukashenko and Russian President Dmitry Medvedev on April 10, 2009. Officials in Minsk claim that during the meeting, Medvedev promised that Belarus would be charged $150 per 1,000 cubic meters – that figure being the average yearly price for gas in 2009. This verbal agreement was then sent to Gazprom in the form of an addendum to the existing gas contract, however Gazprom never responded to the letter.

When asked about the conversation between the two presidents, Miller replied that there was in fact such a conversation but the agreed upon terms were not included in the addendum to the contract.

Gazprom has stated that it plans to charge Belarus “European prices” for gas beginning in 2011. What that might be is difficult to say and will depend upon the price of oil.