Moscow Gives Minsk Gas Debt Ultimatum

Moscow threatened on Tuesday to reduce deliveries of natural gas to Belarus if it does not pay its $200-million debt within five days.

Speaking at a meeting with Gazprom CEO Aleksei Miller, Russian President Dmitry Medvedev warned that if Belarus failed to settle the debt within the period, "strict measures will have to be taken."

"In accordance with the terms of the contract, we have all grounds to cut the amount of gas deliveries to Belarus in proportion to its debt to Gazprom," RIA Novosti quoted Mr. Miller as saying.

He noted that Belarus had run up the debt by continuing to pay for this year’s gas imports at last year’s prices.

The Russian president said that he had discussed the matter at last week’s talks with Alyaksandr Lukashenka. "He said that the situation had been caused by a difficult financial position but, honestly speaking, it is a hard time for all now and Gazprom has many problems. That is why, unfortunately, this is not a sufficient explanation," Mr. Medvedev was quoted as saying.

Belarus has enough money to settle the debt, Mr. Miller said, pointing to the final $625-million installment paid by Gazprom to Minsk for a stake in the Beltranshaz gas pipeline operator earlier this year.

Gazprom says that Belarus continues to pay $150 for 1000 cubic meters, lower than the contract price that was raised by the Russian monopoly from $121.98 in the fourth quarter of 2009 to $169.22 in the first three months of this year. It has warned that the debt could swell to $600 million by the end of the year, projecting the price to average out at $187 this year.

Belarus underpaid last year as well. The contract price was $210.32 in the first quarter of 2009, but it was projected to average out at $150 during the entire year. Citing the projections, the Belarusian government refused to pay the higher price and ran into a debt of $244 million in the summer of 2009. The contract price fell to $121.98 in the fourth quarter, and the debt automatically dwindled.