Russia's state-controlled Gazprom has cut the supply of natural gas to Belarus by 15 percent, as talks between the two countries over Minsk's gas debt have failed to yield results.
Gazprom says Belarus owes $192 million for gas supplied over the last six months -- a claim disputed by Minsk.
The gas giant says it will increasingly cut supplies "day-by-day" -- by as much as 85 percent -- if the debt issue is not resolved.
Gazprom CEO Aleksei Miller announced the cuts during a televised meeting with Russian President Dmitry Medvedev today.
"The five-day term given to Belarus to repay its debts for Russian gas deliveries has expired," Miller said. "The debt has not been repaid, and starting at 10:00 a.m. Moscow time on June 21, 2010, daily supplies of Russian gas to Belarus are to reduced by 15 percent."
Belarusian First Deputy Prime Minister Vladimir Semashko said his country planned to settle its gas debt within the next two weeks, adding that Russia should also pay Belarus $217 million in fees for transiting gas to Europe.
Belarus sent a delegation
to Moscow to continue talks on June 20, and Medvedev ordered Gazprom to continue the negotiations.
Belarus had proposed paying the debt with machinery and other industrial goods.
However, Moscow has adopted a hard line, insisting it will accept only cash for the debts. Medvedev had tough words during his meeting with Miller.
"They must pay in accordance with the contract [and] the contract calls for payments in foreign hard currency," Medvedev said. "Anything else simply contradicts our hard-currency laws. Gazprom cannot accept anything else -- neither pies, nor butter, nor cheese, nor pancakes, nor anything else can serve as payment. Our Belarusian partners have to understand this."
Speaking later in the day, however, Russian Prime Minister Vladimir Putin took a softer approach, telling a meeting of the government that reductions of up to 85 percent would be justified.
But, he added, Russia will not make further cuts, "keeping in mind our particular relationship with Belarusian consumers."
Gazprom says Belarus owes $192 million for gas provided since the beginning of the year, saying Minsk has been paying $150 per 1,000 cubic meters, instead of the contract price of $169.20 for the first quarter and $184.80 for the second.
On June 20, Belarus President Alyaksandr Lukashenka cited Belarus's close relationship with Russia in arguing for a reduction in the agreed-upon prices.
He noted recent reports of reductions in the price of Russian gas to Hungary and Ukraine, then asked, "Why did they decide to increase the price for us by 30 percent?"
"It doesn't matter that there was a difference in the price to begin with, since for the Russian Federation there is a big difference between Belarus and other countries," Lukashenka said. "We give Russia a lot of benefits, beginning with defense production, so they shouldn't act this way in relations with Belarus. Russia and Gazprom won't get a lot of benefit from this, but they might lose a lot."
Relations between Moscow and Minsk have been increasingly strained in recent months. Last month, Russia and Kazakhstan agreed to proceed alone on a customs-union project that was to have included Belarus. Lukashenka also irked the Kremlin by offering sanctuary to deposed Kyrgyz President Kurmanbek Bakiev.
Belarus is a major transit country for Russian gas to Central and Western Europe. Some 20 percent of Russian exports to Europe pass through the former Soviet republic.
EU officials were meeting to assess the impact of Russia's latest gas cutoff. A debt and pricing dispute between Russia and Ukraine early last year left several EU countries deprived of gas for days during a freezing winter.
Gazprom officials have moved quickly to calm European concerns that the spat with Minsk could affect supplies farther down the line, saying there is excess capacity in pipelines transiting Ukraine that could be used if necessary.
Earlier this year, Gazprom paid $625 million for a 12.5 percent stake in Beltransgaz, the state company that controls gas pipelines in Belarus.compiled from Reuters and other agency reports