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By Jason Simpkins
Belarus eased some of the tensions with Russian oil-and-gas giant, Gazprom, Friday, by paying off part of its debt. Belarus has reportedly paid $190 million of its $456 million dept to Gazprom.
The deal was a source of major relief throughout the European Union.
The Gazprom-Belarus disagreement started over a supply contract negotiated by the two parties last year. Under the terms of the deal Belarus was to pay $100 per 1,000 cubic meters of gas, more than double the previous rate of $46. Belarus was allowed to pay only $55 per 1,000 cubic meters for the year’s first half, a stipulation meant to give its economy time to adjust.
However, the deal still required payment of the full $456 million by July 23. Belarus defaulted on the payment and has been stalling in the hopes of landing a more economical deal. At one point, Gazprom threatened to cut nearly half of Belarus’ gas supply, which made the rest of Europe very uncomfortable.
In the midst of a similar dispute in 2006, Gazprom resorted to cutting off gas supplies to the Ukraine. As a result, the country siphoned gas off a transit pipeline – literally leaving the rest of the continent out in the cold. Amid fears that Europe was in for a repeat performance, a meeting of gas experts from the European Union’s 27 member nations was called, but has since been cancelled.
If the issue does escalate, Belarus would be in position to siphon gas from pipelines carrying one-fifth of Russia’s gas exports to Europe – even though Gazprom assured EU officials that Europe’s gas supplies would be unaffected by this spat.
At this point, however, it seems unlikely the conflict will get that far out of hand. With virtually nowhere else to turn for energy, Belarus will likely have to give in, despite having made an honest attempt at renegotiating its existing agreement and achieving a lower price. Kommersant, Russia’s online daily newspaper, reported on Saturday that Belarusian President Alexander Lukashenko “promised to find the $460 million needed.”
Gazprom currently supplies a quarter of Europe’s gas supply. The state-owned oil and gas monopoly has repeatedly been exposed as a state-run tool for leverage. Many experts say that these alarming situations are a consistent reminder that Europe is all too dependent on Russia as a key energy supplier. And Russia is all too willing to exploit that dependence, these analysts say.