ACCORDING to reports on 27 December, the government of Belarus has issued an implicit ‘threat’ that it could stop Russian gas deliveries through its pipelines to western Europe unless Gazprom relented on demands that the country pays considerable price increases in 2007. “We are inter-dependent. If I don’t have a domestic gas supply contract, Gazprom won’t have a transit deal,” Belarus’ Deputy Prime Minister Vladimir Semashko is reported to have said at Minsk airport late on 26 December after his return from failed talks in Moscow. “I think Gazprom should give a signal and come to Minsk. It’s their turn now.”
Mr Semashko did not say whether Belarus was prepared to stop all gas transit via its territory. Two years ago, the country took no such action in a similar dispute but Gazprom accused it of taking gas from transit pipelines for its domestic needs. Gazprom said on 26 December that the latest round of talks with Belarus on prices for 2007 had ended without agreement, but it said customers in western Europe were safe as it has reserves of gas in Austria and Germany to guard against possible shortfalls.
Relations between Russia and its former ally Belarus degenerated as the 1 January deadline approached, reminiscent of the 2006 reduction of supplies to Ukraine which reduced flows to Europe in the first days of January. However, it is understood that Gazprom still hopes for a deal to allow Belarus to receive gas and Gazprom to transit gas to Poland and Germany. The Russian company has repeatedly warned Belarus it will have to pay higher prices from 2007 and allow shared control of its pipelines, or face reduced supplies. Currently, Gazprom provides around 25% of Europe’s gas requirements, although the Ukraine affair prompted European leaders to raise concerns over reliance on Russia. Belarus is also a supply route, with smaller volumes: Poland and Germany get 30bn cum/yr of gas via Belarus, while Ukraine transits over 100bn cum/yr to over 20 European countries. Gazprom says it offered major concessions to Belarus at the 26 December meeting, including reducing the proposed price from $200 to $110/1000cum. However, Belarus now pays $46.7/1000cum, or as much as consumers in Russia; by comparison, Gazprom will charge Moldova $170 in 2007 and Georgia $235, while consumers in Europe pay over $250. Gazprom also said Belarus could pay part of its bill in assets, but the Belarus government insists it should pay lower prices instead. “We are ready to sign before the end of the year. But talks will probably continue in January-February… Before that, the price will be $46.7 because the old deal is valid in the absence of a new deal,” Mr Semashko said. He also said he did not believe Gazprom would made good on its threat and cut gas supplies from January. “It will prove to be an unreliable supplier. That would damage Gazprom’s reputation,” he said.
