Russia reopens Belarus gas tap but dispute goes on

[June 24, 2010]  MOSCOW (AP) -- Russia's gas monopoly said Thursday it is resuming supplies to Belarus now that it has paid a near-$200 million bill, but the ex-Soviet neighbor is in turn threatening to stop the transit of gas on to other European countries unless Moscow settles its own debts.

The dispute, which briefly caused a 40 percent drop in Russian gas supplies to EU member Lithuania, comes as a sobering reminder of the risks to Europe's energy supplies posed by politically-charged disputes between Russia and its neighbors. A similar row with Ukraine last year cut off heating to millions in the middle of winter.

Alexei Miller, the chief of Russia's state-controlled natural gas company Gazprom, has said supplies to Belarus would resume Thursday, according to the Kremlin.

But Belarus, which on Wednesday said it had paid its $187 million debt to Russia, demanded in return that Moscow pay what it claims is a $260 million bill for transit of gas to the West. Belarus has threatened to cut off gas transit on Thursday if Moscow doesn't pay up.

Gazprom spokesman Sergei Kupriyanov said at a briefing that the company had paid Belarus $228 million in transit fees, in line with the contract, but that Belarus was demanding a higher fee that Gazprom rejects.

Belarus quickly responded by saying that Russia must pay a higher price or face a proportionate cut in transit supplies.

Kupriyanov rejected the demand and said the company wouldn't pay more. Russian Prime Minister Vladimir Putin backed that position, saying changes in transit fees should be subject to separate talks.

Miller told Putin that overall transit shipments of Russian gas to the European Union nations fell by 20 percent Wednesday because Belarus siphoned gas intended for export.

EU member Lithuania, which gets all of its Russian gas via Belarus, reported a 40 percent drop in supplies on Wednesday, EU's energy chief Guenther Oettinger said.

He said Wednesday that neither Russia or Belarus should involve European customers in their disputes, describing the reduced supplies to Lithuania as "an attack against the whole European Union."

"We have an expectation that this crisis and this politics between Russia and Belarus should not come to Europe. We expect that contracts are contracts," Oettinger said.

He warned also that both Belarus and Russia needed a good relationship with Europe.

Lithuania's energy company said that Russian gas supplies returned to normal levels Thursday.

About 80 percent of Russian gas exported to Europe normally goes through Ukraine, while the rest is carried via Belarusian pipelines. Gazprom has insisted that the dispute with Belarus will not hurt European customers as the company can reroute gas supplies through the Ukraine transit pipeline.

Russia has cut gas supplies to both Ukraine and Belarus several times in recent years due to payment disputes. In early 2009, a cutoff to Ukraine left many Europeans without heating amid a freezing winter. The shut-downs have prompted the EU to search for alternate gas supply routes.

With demand for gas low in the summer, this week's shutdown didn't affect customers as strongly as earlier cutoffs, but it added to the EU's concerns about Russia's reliability as a top energy supplier.

"It can't be any worse," Alexander Nazarov, an analyst with the Moscow-based Metropol investment bank said when asked how the latest dispute could hurt Russia's image.

Russia is Belarus' main ally and sponsor, but relations between the two former Soviet countries have been strained by financial arguments.

Belarus has insisted that Russia should provide cheaper oil and gas as part of the customs union deal that is to come into force next month, but Russia has refused.

[Associated Press; By VLADIMIR ISACHENKOV]

Associated Press writers Nataliya Vasilyeva in Moscow, Yuras Karmanau in Minsk, Belarus and Aoife White in Brussels contributed to this report.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.