- The Washington Times - Tuesday, December 26, 2006

MINSK, Belarus (AP) — Residents of Belarus’ capital stocked up on warm clothes and electric heaters as fears rose yesterday that Russia will cut off the supply of natural gas on which the country depends.

Russia says Belarus must pay more than twice as much for gas next year — and even more later — and turn over a half-share in its pipeline system, a major transit route to Europe, if it wants to avoid a gas shut-off starting New Year’s Day.

The dispute bears strong echoes of last year’s crisis between Russia and Ukraine, which caused ripples of concern in Western Europe, whose supplies of Russian gas were briefly disrupted.

But in that case, Russia’s price demand was seen as political pressure against a Western-leaning government. This time, it is against a country whose longtime leader has close ties with Moscow.

Belarusian opposition leader Alexander Milinkevich suggested Russian demands are aimed at forcing President Alexander Lukashenko to cede control over the pipeline network and other attributes of sovereignty in exchange for continued Russian support for his authoritarian regime.

“Through energy pressure, the Kremlin is trying to force Lukashenko to integrate according to the Russian scenario, which is extremely dangerous for Belarus,” Mr. Milinkevich said.

Anna Kuprilko, a 48-year-old tractor factory worker whose sister lives in Ukraine, was among those shopping for a heater yesterday.

“My sister told me about Ukraine’s experience, and I want to keep myself secure,” she said. “My family is prepared for the worst.”

Talks yesterday between Belarus and Russia failed to resolve the issue, and a senior official of the Russian natural gas monopoly Gazprom said a cutoff was certain without an agreement.

“In the absence of a contract, there is not and cannot be a basis for the delivery of gas to any country or any consumer in the world,” said Gazprom’s export division chief, Alexander Medvedev.

Mr. Lukashenko said the talks on Russian supplies were “very difficult” and urged energy saving. “In the conditions of pressure on Belarus, one must know how to live within one’s means and economize, especially on energy,” he said.

Mr. Medvedev said a shutoff would not affect the 30 percent of Russian gas deliveries to Europe that go through Belarus. Russian gas provides a quarter of Europe’s consumption.

Much of the Russian gas destined for Poland and Germany, among other countries, goes through a pipeline that is owned by Gazprom but is under the day-to-day control of the Belarusian pipeline network, Beltransgaz.

“The issues of transit and supplies are not linked and will not be linked,” Mr. Medvedev said. But he raised the possibility that Belarus would seek to siphon gas meant for European customers, saying that gas “will be delivered to the Russia-Belarus border. How the Belarusians will conduct themselves I don’t want to guess, but I hope it won’t come to that.”

The price dispute with Ukraine in early 2006 resulted in temporary supply reductions to European customers, raising concerns about Russia’s reliability.

Mr. Medvedev said Gazprom had scrapped its initial demand that Belarus begin paying $200 per 1,000 cubic meters of gas next year. Under what he called a final offer, Belarus would pay $105 next year — well below world market prices, but more than twice the $47 it now pays.

The price would consist of $75 in cash and $30 in shares of Beltransgaz, he said. It would increase annually at the same rate as prices for Russian industrial consumers, reaching a market-style European price — minus the transit cost and export duties, which will be exempted — in 2010.

Gazprom would pay for a half-share in Beltransgaz by allowing Belarus to pay $30 per 1,000 cubic meters in shares over the next four years.

The increasing price would be a severe blow to Belarus’ Soviet-style state-run industries, whose financial health — and, in turn, a portion of Mr. Lukashenko’s popularity — depends on cheap gas.

Russia had supplied gas to former Soviet states at below-market prices for years after the 1991 Soviet collapse, but now wants to sell all its gas at world prices.

Westward-leaning Georgia agreed Friday to pay $235 per 1,000 cubic meters, or $6.71 per 1,000 cubic feet, for its Russian gas imports under threat of a New Year’s Day gas freeze. U.S. natural gas futures settled yesterday at $6.11 per 1,000 cubic feet on the New York Mercantile Exchange.

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