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Latest update : 2010-06-23

Belarus said it has paid its debt to Russia's Gazprom and threatened to halt transit of Russian gas to Europe if the energy giant did not pay $260 million in transit fees, the latest salvo in a row over rising Russian gas prices.

AFP - Belarus said Wednesday it had paid its debt to Russian gas giant Gazprom in full and threatened to shut down the flow of Russian gas to Europe if the firm did not pay transit fees by Thursday.

With the energy feud between the ex-Soviet neighbours in a third day and supply disruption reported in Europe, EU Energy Commissioner Guenther Oettinger called the dispute an "attack" on the whole European Union.

Belarussian Deputy Prime Minister Vladimir Semashko said Minsk had transferred 187 million dollars "to settle our debt to Gazprom" and demanded that Gazprom now pay a debt to Belarussian firm Beltransgaz for transit fees.

"I demand that Gazprom pay Beltransgaz 260 million dollars by 10:00 am (0700 GMT) tomorrow. If this is not done, we will be forced to shut down hydrocarbon transit through Belarussian territory."

Gazprom spokesman Sergei Kupriyanov could not confirm that payment had been made.

"We will confirm when we receive the money," he told AFP.

Russia had earlier cut gas supplies to Belarus by nearly two thirds on Wednesday, as the payment dispute claimed its first European victim when Lithuania said it had suffered a 40 percent reduction in supplies pumped through Belarus.

"This isn't only a problem for this one member state, it is a problem, it is an attack on the whole European Union," Oettinger told reporters in Brussels.

The EU commissioner urged Moscow and Minsk to honour their commitments to Europe, stressing that "their problems should not be our problems".

In a dramatic television appearance for the third day running, the chief executive of Gazprom said the Russian gas giant was cutting Belarus' supplies by 60 percent from Wednesday morning but said European customers should not worry.

"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," Alexei Miller said in comments released by his company.

"The bad news is the Belarussian side is undertaking no action to settle the debt for Russian gas supplies," he said, adding that the cuts would continue in proportion to Belarus's outstanding debt.

The dispute centres on Belarus' refusal to accept a hike in the price it pays for Russian gas from the 150 dollars per 1,000 cubic metres it paid on average last year to 169.20 dollars in the first quarter of this year and 184.80 dollars in the second quarter.

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 in retaliation, raising fears in the EU, whose members Lithuania, Germany and Poland depend on Russian gas piped through Belarus.

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

In an escalating war of words, Lukashenko said Tuesday he would not be humiliated with references to "cutlets and sausages" by Moscow after his Russian counterpart Dmitry Medvedev said Russia could accept "neither pies nor butter nor cheese nor pancakes" when Belarus offered to foot the gas bill with machinery and other equipment.

In recent months Russia and cash-strapped Belarus have often been at loggerheads over energy prices and customs duties, but the latest dispute is the fiercest feud yet between the two ex-Soviet neighbors.

The latest energy row raised the spectre of a 2009 dispute between Russia and Ukraine, when supplies to European customers were cut off for two weeks in the dead of winter.

But analysts said the impact of any potential disruptions would not be as serious this time because of lower gas demand in the summer.


Date created : 2010-06-23


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