MOSCOW Russia stepped up its gas tussle with Belarus on Wednesday, saying it had cut supplies to its neighbor by more than half but that gas was flowing smoothly to Europe despite Minsk's threats to shut down transit pipelines.
On Tuesday, Belarussian President Alexander Lukashenko ordered the transit of Russian gas to Europe halted in a debt dispute with Russia's gas export monopoly Gazprom, declaring the two nations were facing a full-scale "gas war."
"I have two pieces of news for you -- one good and one bad. Let's start with the good news -- the transit of Russian gas through Belarus is taking place at full volume and Russian gas customers are having no problems with deliveries," Gazprom's head Alexei Miller told state television.
"The bad news is that the Belarussian side is taking no steps to pay its debt for Russian gas supplies, and from 10 am (0600 GMT) on June 23, 2010, we are introducing a limit on Russian gas supplies to Belarus by 60 percent," he added.
Russia, the world's largest energy exporter, supplies Europe with 25 percent of gas needs, with four-fifths of that flowing via Ukraine and one-fifth via Belarus.
Ukraine has already promised to ship more Russian gas to Europe to help Moscow plug the potential gap in supplies via Belarus, while analysts have said the impact on consumers should not be big given low gas consumption in Europe at the moment.
Poland and Lithuania, which alongside Germany get their Russian gas via Belarus, said gas was flowing normally.
The close ties between Russia and Belarus have been increasingly strained as Lukashenko has sought to use Russia's eagerness to maintain an ally on its Western flank to pressure Moscow not to scrap longstanding economic subsidies.
Belarus is to hold presidential elections next year and Lukashenko, who has ruled the country since 1994 in what analysts describe as a Soviet authoritarian style, has pledged to raise state wages and salaries.
Belarus pays the lowest price among Russian gas customers and has bridled at recent increases, saying it should pay less for oil and gas if Moscow is serious about close ties. Lukashenko has courted the West and sought other energy sources.
Relations have soured further since Russia and Belarus failed to agree on unified customs rules and Lukashenko gave refuge to ousted Kyrgyz President Kurmanbek Bakiyev, despite Moscow's support for the new Kyrgyz leadership.
"This is a combination of both the commercialisation of Russian foreign policy towards the former communist countries, with Gazprom wanting its money, and Moscow's attempts to punish Belarus for shielding Bakiyev and his attempts at balancing between Russia and the EU," said Jana Kobzova, an analyst at the European Council of Foreign Relations.
Previous pricing disputes with Minsk led to oil supply cuts, with Poland and Germany being affected most as they receive large volumes of crude and gas from Russia via Belarus.
A similar standoff with Kiev halted much larger Russian gas supplies across Ukraine for almost two weeks in January 2009, leaving many Europeans without fuel during a bitter cold snap.
Russia and Ukraine have had two major standoffs over gas since 2005 amid badly strained relations between the Kremlin and Ukraine's pro-Western former President Viktor Yushchenko.
Ties have dramatically improved since Yushchenko was replaced by Viktor Yanukovich, seen as much more loyal to Moscow. He swiftly agreed new gas and military base deals with the Kremlin after taking power earlier this year.
In the new dispute with Belarus, Gazprom accuses Minsk of having amassed a debt of $192 million for gas deliveries since January. Belarus says Gazprom owes it $260 million for gas transit, but Gazprom says Minsk had blocked payments.
On Wednesday, Gazprom said Minsk had fully paid its gas bills for May but the problem of debt for previous months had yet to be resolved.
Shares of Gazprom traded 0.3 percent down at 1020 GMT, underperforming the broader market.
(Editing by James Jukwey)
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