Russia arms its energy weapon, targets Belarus over gas prices
Tuesday July 19, 2016
Russia finds itself once again in a row with one of its neighbors over gas prices — a constant theme since the early 2000s — triggering renewed fears that Moscow is again using energy as a weapon to put pressure on its customers.
Back in the spotlight is Belarus, which has already been confronted with the Russian energy weapon three times before in 2004, 2007 and 2010.
Since July 1, Russia has reduced crude oil supplies to Belarus by more than 40% — a direct consequence, Moscow says, of the row over gas prices.
And who’s to say that Russia won’t turn off the gas taps to Belarus — just as it did in 2004 and 2010 — to force Minsk to pay up?
This, in turn, would likely see some disruption to the transit of some 37 Bcm/year of gas via Belarus to Europe.
Below is a summary of previous occasions where price disputes have led Russia to use its energy weapon in the past.
2004: Belarus
On February 18, Russia halted all gas deliveries into Belarus, including gas intended for European markets accessed via Belarus’ pipeline network, following a price dispute, the first example of Russia using its clout to force a customer’s hand.
Supplies to Belarus were reduced early on February 18 before being suspended completely after Belarus began removing gas from transit lines.
Deliveries restarted on February 19, less than 24 hours after being halted, when Belarus agreed a short-term gas supply contract with independent trader Trans Nafta.
Disruption was felt in a number of European countries over the 24 hours, including Poland and Germany.
2006: Ukraine
Gazprom cut supplies to Ukraine on January 1 leading to widespread supply shortfalls across the EU after a long-standing pricing dispute between Moscow and Kiev.
The dispute came following the Orange Revolution that saw pro-western President Viktor Yushchenko elected to power.
By December 2005, Ukraine had refused to pay $230/1,000 cu m for Russian gas — a rise from $50/1,000 cu m — after a year of talks about gas pricing and transit.
Ukraine admitted to withholding supplies meant for onward transit to Europe, which led to disruption in gas deliveries to much of eastern and southeastern Europe and even further west in France, Germany, Italy and Austria.
Gazprom began to restore gas supplies to Ukraine on January 3 and an agreement was reached on January 4 that sa...