Gazprom Threatens to Cut Gas Supplies to Belarus and Europe

Strategic Insights -

A dispute between Russia's energy monopoly, Gazprom, and Belarus, a transit country for Russian energy exports, has escalated, with Gazprom warning of possible disruptions to gas supplies to Europe. Belarus, which imports natural gas and transships it to Western markets, has refused to pay a higher price for the fuel, prompting Gazprom to issue a deadline for shutting off supplies. The standoff has raised concerns about energy security in Europe, where 40% of natural gas imports come from Russia.

Key Takeaways:

  • Gazprom has threatened to cut gas supplies to Belarus, which transships 20% of Gazprom's exports to Europe, over a pricing dispute.
  • Belarus currently pays $46.68 per 1,000 cubic meters, the lowest price in the former Soviet Union outside of Russia, while Ukraine pays $135 and Georgia pays $235.
  • The European Union imports 40% of its natural gas from Russia, with Gazprom's average price in Western Europe in the first half of 2006 being $265.
  • Belarus has proposed paying just $75 per 1,000 cubic meters and having Gazprom front the entire $2.5 billion for a 50% share in Beltransgaz, a proposal deemed "very unlikely" to satisfy Gazprom.
  • European officials have downplayed the possibility of a repeat of the gas crisis in January, citing sufficient gas stocks in the EU member states.

Statistics:

  • 8% of EU natural gas imports pass through Belarus.
  • 20% of Gazprom's exports to Europe pass through Belarus.
  • 80% of Gazprom exports to Europe pass through Ukraine.
  • 40% of EU natural gas imports come from Russia.
  • Gazprom's average price in Western Europe in the first half of 2006 was $265.
  • Ukraine pays $135 per 1,000 cubic meters, while Georgia pays $235.
  • Belarus pays $46.68 per 1,000 cubic meters.

Sources:

  • "Belarus Vows to Get Gas Supplies Despite Moscow Threat" by Andrew E. Kramer, New York Times (January 1, 2007)
  • Gazprom's website, [www.gazprom.com](http://www.gazprom.com)
  • Reuters, "European Commission downplays gas supply crisis" (December 27, 2006)
  • Jerome Guillet, Paris-based banker and authority on Gazprom business practices
  • European Commission spokesman, Amadeu Altafaj Tardio