Russia halves gas supplies to Belarus

Intensifies tussle with country in debt dispute but supplies to Europe not affected

Russia stepped up its gas tussle with Belarus Wednesday, saying it had cut supplies to its neighbour by more than half but that gas was flowing smoothly to Europe despite Minsk's threats to shut down transit pipelines.

On Tuesday, Belarussian President Alexander Lukashenko ordered the transit of Russian gas to Europe halted in a debt dispute with Russia's gas export monopoly Gazprom, declaring the two nations were facing a full-scale "gas war."

Weaker demand

"I have two pieces of news for you — one good and one bad. Let's start with the good news — the transit of Russian gas through Belarus is taking place at full volume and Russian gas customers are having no problems with deliveries," Gazprom's head Alexei Miller told state television.

"The bad news is that the Belarussian side is taking no steps to pay its debt for Russian gas supplies, and from 10am [0600 GMT] on June 23, 2010, we are introducing a limit on Russian gas supplies to Belarus by 60 per cent," he added.

Russia, the world's largest energy exporter, supplies Europe with 25 per cent of gas needs, with four-fifths of that flowing via Ukraine and one-fifth via Belarus.

Ukraine has already promised to ship more Russian gas to Europe to help Moscow plug the potential gap in supplies via Belarus, while analysts have said the impact on consumers should not be big given low gas consumption in Europe at the moment.

The dispute hasn't hurt Europe's supply, in part because demand is weaker in the summer, an International Energy Agency (IEA) official said.

"We haven't seen any impact for the moment," Ian Cronshaw, the International Energy Agency's head of energy diversification, said yesterday in Paris, where the IEA presented an annual report.

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