Gas Delivery Dispute
August 1, 2007
The Russian gas monopoly Gazprom said it would reduce gas supplies to its neighbor by 45 percent beginning on Friday due to outstanding Belarusian debt after a doubling of gas prices had caused Minsk to fall $456 million (333 million euros) behind on its payments in recent months.
"We take this development very seriously," EU Commission spokesman Martin Selmayr told reporters Wednesday.
Minsk and Moscow should resolve their dispute without delay and create conditions for the timely resumption of deliveries, he said.
If needed the commission could convene a meeting of a European Union "gas coordination group" to study implications the row could have on energy supplies to the 27-nation bloc, Selmayr said.
Subsidized prices
About one fifth of Russian gas exports to Europe transit Belarus, but western customers had been told about the planned reduction of supplies, according to Gazprom.
Gazprom has accused the Belarus gas company Beltransgas of having paid for about half of its imports of Russian natural gas in the first half of 2007.
Russia and Belarus previously clashed over energy supplies at the beginning of 2007.
While a complete stoppage of gas supplies to Belarus was avoided, Russia reduced its supplies of oil for several days -- a decision that also affected the transit pipeline into the EU.
"Gazprom will take all possible measures for the transportation of Russian gas through the territory of Belarus in full accordance with current obligations to European customers," the company said in a statement, adding it would pursue legal action against Belarus if it siphoned gas out of transit pipelines.
Alexander Burgansky, an analyst at Renaissance Capital, said Belarus was unlikely to start taking gas from transit pipelines.
"Consumption is seasonally low, and underground storage facilities are full everywhere," he told Reuters.
The cause of the current conflict is Moscow's attempt to raise step by step the strongly subsidized energy prices for Belarus to an international level.
Estonians against sea pipeline
Plans for an alternative gas delivery route from Russia to western Europe were also dealt a blow on Wednesday after an academic report called on the Estonian government to not allow a consortium behind a controversial gas pipeline to construct it in Estonian waters.
A possible Russian military presence and potential harm to the environment should force the government to deny a request from the Nord Stream consortium to conduct an environmental study in Estonian waters, daily Postimees reported quoting the study by the country's Academy of Sciences.
"Neutral states like Finland and Sweden can allow the presence of the Russian armed forces and Gazprom armed operatives in their economic zones or territorial waters, but as NATO members Estonia and Poland cannot allow that," the report said.
In April, Nord Stream asked Estonian authorities to measure the depth of the Baltic Sea in Estonian waters to determine if it was possible to shift the pipeline south of the Finnish coast. The authorities turned to scientists for an opinion.
Bitter dispute
Gazprom has stressed its 2005 agreement with German firms Eon and BASF to lay a 1,200-kilometer (745-mile) gas pipeline, known as Nord Stream, across the Baltic Sea from Russia to Germany, saying it would boost Europe's energy security and cut out the potential for political conflict with transit countries. Former German Chancellor Gerhard Schröder is the chairman of Nord Stream's shareholders' committee.
The pipeline has been the subject of bitter dispute in the Baltic region ever since in was first proposed in 2005. Many of the states bordering the Baltic have argued that it could disturb stores of chemical weapons dumped in the sea after World War II.
So far more than 20,000 people, mostly from the Baltic states, have signed a petition to stop the construction of the pipeline.
If completed, the pipeline would create separate routes for Russia to supply gas to eastern and western Europe.
As a result, the EU's eastern European member states have complained that it would allow Russia to cut off their gas supplies -- as it did to Ukraine in January 2006 - without affecting supplies to its richer western clients.