UPDATE 1-Minsk sends delegation to Moscow for crisis gas talks

Sun Jun 20, 2010 5:21pm IST

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* Emergency talks to be held on Monday

* Gov't source says Europe could be affected

(Adds quotes, detail, background)

By Andrei Makhovsky

MINSK, June 20 (Reuters) - Belarus said it was sending a delegation to Moscow on Sunday for emergency talks with Russian gas giant Gazprom (GAZP.MM) after the two failed to resolve a price row that has raised the spectre for European gas cuts. Russia has said it will cut 85 percent of gas supplies from Monday to transit country Belarus if its ex-Soviet neighbour fails to pay $192 million in debt to Gazprom, which Minsk denies it owes.

"The delegation leaves tonight for talks on Monday...the issue of debt will be discussed," Belarussian Deputy Energy Minister Eduard Tovpenets told Reuters.

A source in the Belarussian government, who spoke on condition of anonymity, said European gas deliveries could be affected.

"The 80 percent area is a substantial reduction and of course it can affect transport issues," he told Reuters.

Russia's gas price disputes with its neighbours became a worry for Europe when its supplies were halted for almost two weeks in the dead of winter in early 2009 while Moscow and Ukraine argued over prices and transit terms.

Any cuts, especially if they affect supply beyond Belarus, could further damage Russia's reputation as a reliable exporter at a time when Gazprom is facing falling demand from crisis-hit Europe and competition from U.S.-produced shale gas.

A cut in supply to Belarus would not affect Europe as much as the 2009 standoff with Ukraine because only about a fifth of Russia's gas exports to Western Europe go through Belarus with the rest going through Ukraine. Seasonal demand is also much lower than in the winter when the 2009 disruption took place.

Energy experts agree that a worst-case scenario of seriously damaged supplies to Europe is unlikely. Gazprom can re-route gas deliveries to Europe to avoid Belarus.

Analysts say Poland can import Russian gas via Ukraine and Germany can receive it through Ukraine, Slovakia or the Czech Republic.

Tovpenets added that the delegation for Monday's talks would include the head of state transport firm Beltransgaz and members of the Energy and Economy Ministries.

(Writing by Amie Ferris-Rotman)

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