Russian firm threatens Belarus gas cutoff on Jan. 1

MOSCOW -- Russia and Belarus stood their ground yesterday in a dispute over natural gas prices, with Russia's state-run gas monopoly OAO Gazprom setting the clock ticking toward a Jan. 1 supply cutoff if its neighbor does not agree to pay more.

Belarus warned that a suspension of supplies could jeopardize deliveries across its territory to Gazprom clients in European Union member states -- a threat targeting Russian concerns of a repeat of the blow its image suffered when a cutoff of deliveries to Ukraine a year ago led to brief supply disruptions in Europe.

Gazprom, which is demanding that Belarus pay more than twice the current price for gas next year and hand over a 50 percent stake in its gas distribution system, refused to back down despite the threat from Minsk.

"If a gas supply contract for next year is not reached, Gazprom will have no grounds for deliveries of gas to Belarus as of 10 a.m. Moscow time on Jan. 1, 2007," Gazprom chief Alexei Miller said in televised comments.

Miller said that Gazprom would supply gas for European consumers to the Russia-Belarus border in full compliance with its contracts.

But he also said the company sent letters to Germany, Poland and Lithuania informing them about "the developing situation regarding gas supplies to Belarus," suggesting concern about disruptions in deliveries to those countries.

About 30 percent of Russian gas supplies to Europe transit through Belarus, much of it to Germany, Poland, and Lithuania.

Gazprom officials had threatened to halt supplies meant for Belarusian consumption if no contract was signed before the existing one expires Sunday, but Miller's comments marked the first time the company set an hour.

He said fresh talks yesterday had failed, blaming what he called Belarus's "destructive position."