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Ukraine poses new gas competition to Belarus as waters calm with Russia

Russia and Belarus have kissed and made up after a dispute that resulted in cutting gas supplies to Europe. But Belarus may see increased competition coming from Ukraine, which wants to form a partnership with the EU.

A gas pressure gauge of a main gas pipeline from Russia in the village of Boyarka near the capital Kiev, Ukraine

Belarus says Russia still owes it millions for gas transit

Russia's former-Soviet neighbor Ukraine put forth a proposal Friday to build a new pipeline to pump gas from Russia to Europe through its territory.

"(Our) concept suggests creating a joint venture with EU countries, Russia and Ukraine to build a pipeline across Ukraine that would provide additional volumes of gas transit to Europe," Ukrainian President Viktor Yanukovich said after a meeting with visiting US Secretary of State Hillary Clinton.

"Our calculations show that this idea can be competitive and attractive," he added.

Calm waters...for now

Meanwhile, Belarus and Russia have signed an agreement on gas transit, in hopes of ending the disputes that let to Russia cutting its Europe-bound supplies through Belarus last month, officials announced on Friday.

Russian energy giant Gazprom cut its gas supplies to Belarus in order to put pressure on Minsk to pay its gas debts – at first by 15 percent on June 21, and then by as much as 60 percent on June 23.

While Russia pushed for payment of $200 million (159 million euros) by Minsk, Belarusian President Alexander Lukashenko demanded that Gazprom pay its gas transit debt.

Lukashenko threatened in turn to order a retaliatory shutdown of Russian gas transit deliveries to the European Union – a threat that further raised fears in EU member states Lithuania, Germany and Poland, which rely on Russian gas delivered through Belarus.

Gazprom logo

Gazprom cut supplies to Belarus by as much as 60 percent

Lithuania was hardest hit by Russia's gas cut, reporting a 40 percent drop in supply.

After receiving payment from Minsk, Gazprom reopened the gaslines. Gazprom, meanwhile has paid 228 million dollars in gas transit fees to Belarus's gas pipeline operator Beltransgaz, although Belarus still says it must pay 32 million more. Russia has released a statement that this debt would be settled "in the nearest future."

From now on, Russia has agreed to pay a higher fee for gas transit: $1.88 for 1,000 cubic meters to be transported 100 kilometers, up from the previous rate of $1.45.

New disputes could arise, however, later this year as Russian gas prices for Belarus continue to grow. Minsk currently pays $185 per 1,000 cubic meters of gas, and that figure is expected to grow to at least $193 by the third quarter.

Author: David Levitz (AFP/dpa/Reuters)
Editor: Andreas Illmer

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