Update on Belarus-Russia dispute

Gazprom Deputy Chief Executive Alexander Medvedev told Reuters on Saturday, that there has a "very good chance" that the gas dispute with Belarus would be resolved.

"There is a very good chance that all will be well," Medvedev said on the sidelines of the St Petersburg Economic Forum. Further talks are to be held on Saturday.

On Friday, Gazprom CEO Alexi Miller said Belarus had until Monday, June 21 to pay its $192 million gas bill to the Russian gas-export monopoly or lose as much as 85 percent of its Russian supply of the fuel.

Any Gazprom action would theoretically impact natural gas deliveries to Western Europe. Beltransgaz, the Belarusian gas pipeline company, transports about 20 percent of Russia’s Europe-bound gas exports.

However, spokesman Sergey Kupriyanov said that Gazprom would fulfill its commitments to Western Europe even if it cuts gas supply to Belarus.

We shall deliver export supply (to Western Europe) in the previous volume," he said, evidently by utilizing alternative pipeline routes through Ukraine, where the Druzhba pipeline remains Gazprom's largest export pipeline for exports to Eastern, Central and Western Europe.

Of course, politics is the true issue at hand in this dispute.  Relations between Russia and Belarus are increasingly acrimonious. Belarus wants to attract foreign investors to its energy and petrochemical industries and expand economic and political ties with the European Union, a move that irks Russian leaders.

A planned customs union between the two countries and Kazakhstan announced in June 2009, will fail to make its July 1 deadline.  Last month Belarusian Premier Sergei Sidorsky boycotted a meeting with his Russian and Kazakh counterparts.

Belarusian President Alexander Lukashenko has said Belarus is prepared to cede control of pipeline operator Beltransgaz and an oil refinery in exchange for the right to pay domestic Russian prices for oil and gas. Gazprom already holds a 12.5 percent stake in Beltransgaz for which it reportedly paid $625 million earlier this year.

Source: Reuters