Members of the pro-goverment Belarusian Republican Union of Youth walk with Belarussian flags and anti-Russian natural gas giant Gazprom posters, to the Russian Embassy in Minsk, Belarus, December 29, 2006.
Photo: AP
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The Shutoff Maneuver
// Gazprom cuts deliveries to Belarus by half
Russia is beginning a new gas war with Belarus. Gazprom has announced that it will cut deliveries to that country almost by half on Friday. The reason for the offensive is Beltransgaz's debt of $456.16 million to the Russian monopoly. The Belarusians were counting on paying with a credit from Moscow of $1.5 billion, but they have yet to receive it. At Gazprom, they think that Belarus has the means to pay its debt for Russian natural gas.
Gazprom announced yesterday morning that “The daily volume of the gas delivery to Belarus will be proportionally to its real payment by 45 percent beginning on August 3.” From January to June, Gazprom provided Belarus with 10.3 billion cu. m. of gas at $100 per 1000 cu. m. Under its contract, Belarus paid 55 percent of the cost of the gas in the first half of the year and was to pay the remaining 45 percent ($456.16 million) by July 23. Gazprom did not receive that money on that day, however. Sergey Kupriyanov, deputy head of the Gazprom department of informational policy, explained that point 6.4 of the agreement “On the Volume and Conditions of the Delivery of Natural Gas to Belarus in 2007-2011,” signed in Moscow on December 31, reads, “If Beltransgaz violates the conditions of payment for the natural gas provided, Gazprom has the right to impose limitations on natural gas deliveries to Belarus.”
After Russia imposed export duties on deliveries of oil and petroleum products to Belarus at the beginning of 2007, the countries' prime minister, Mikhail Fradkov of Russia and Sergey Sidorsky of Belarus, agreed that Minsk would receive a stabilization credit of $1.5 billion to compensate for falling budget income and to stabilize the balance of foreign trade between Russia and Belarus. The Belarusian prime minister intended to pay off Gazprom from that credit. In the middle of July, Russian Finance Minister Alexey Kudrin stated that everything was ready and only “technical issues” remained to be settled. But the credit was not issued, and no explanation was given.
Negotiations between Fradkov and Sidorsky took place in Moscow on July 23. After the two-hour meeting, the Russian prime minister stated that the issuance of the credit was a complex question and could not be settled quickly. Sidorsky did not comment on the situation at all. After that, Fradkov went on vacation and negotiations on the governmental level were frozen.
The Russian gas monopoly is certain that the Belarusians have money. OAO Beltransgaz received $625 million from Gazprom in June as payment for 12.5 percent of its stock. In addition, Beltransgaz has been charging Belarusian industrial consumers $140 per 1000 cu. m. of gas since January 1, 2007, while Gazprom has been receiving only $55 from it. “We know that the money is being kept in a special account in the National Bank, but Belarusian authorities will not allow Beltransgaz to use its savings to settle up with Gazprom,” a source at the Russian company told Kommersant.
A Gazprom spokesman told Kommersant that “Belarus has three choices: do nothing, and then the gas will be turned off; pay and remove the problem; or offer us something for which we would agree not to turn Belarus off.” At the beginning of the year, Belarusian authorities promised to privatize large Belarusian enterprises. Sidorsky even guaranteed all the big petrochemical plants in Belarus they want to Gazprom, LUKOIL and other Russian industrial corporations. But so far the Belarusian government has not announced a single privatization competition.
Alexander Zhukov, assistant to the Belarusian Minister of Energy, stated yesterday that “The Belarusian side will create all the necessary conditions to regulate the situation and not bring it to reductions in the volume of Russian gas to Belarus.” In addition, a Kommersant source in the Belarusian government promised to renew negotiations with Ukraine in the near future on the purchase of electricity.
Leonid Zaiko, president of the Belarusian strategic development center East-West, thinks that “If deliveries of gas are really reduced, it will be very hard for Belarusian industries. He commented that “We have no large reserves of gas, so serious problems will arise in the real sector of the economy. In particular, the volume of electricity generated at Belarusian electric plants will be reduced. It can be drawn out through radial transmission ,of course, but not for more than a week.”
In December 2006, when Belarus was threatened with a gas turnoff, Belarusian Deputy Prime Minister Vladimir Semashko said that the country could last up to three weeks on its gas reserves in underground reservoirs and gas remaining in the pipe. Now, they say at Gazprom, however, “The situation is different from those of six months ago.” In the summer, they pump gas into underground reservoirs, and do not withdraw it, and the pipeline is only half full. Since a reduction in gas is expected on Friday, and enterprises use less gas on weekends, the main problems for Belarusian industry will begin on Monday.
The threat of reductions of Russian gas to Belarus has already frightened the European Union. Europe receives 40 billion cu. m. of Russian gas per year through Belarus. EU representative Martin Selmayr called on the conflicting sides yesterday to settle their differences peacefully and offered expert assistance to them.
Natalia Grib; Vadim Alexandrov, Minsk
All the Article in Russian as of Aug. 02, 2007
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