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Monday, June 21, 2010

Russia cuts gas supplies to Belarus over debt

(AP) MOSCOW — Russia on Monday cut natural gas supplies to ex-Soviet neighbor Belarus over what it claims is a debt of nearly $200 million for gas already provided.

President Dmitry Medvedev met early Monday with Alexei Miller, the chief of state-controlled gas monopoly Gazprom, and in televised remarks ordered him to implement cuts "to protect the interests of the Russian state."

Miller said the company would gradually cut gas supplies to Belarus by 85 percent, the remainder serving to maintain its pipeline that is also used for transit of Russian gas supplies to other parts of Europe.

Russia last week warned Belarus to start paying off the debt or face cuts . Belarus has challenged the Russian claim and refused to pay.

Miller has said that European customers won't be affected as the company can channel gas supplies normally going via Belarus to another transit pipeline crossing Ukraine. Also, gas consumption in summer is low compared with its peak in the winter and the pipelines aren't filled to full capacity.

Moscow-based Metropol investment bank also said in a note to investors that the shutdown is unlikely to hurt Gazprom's customers in Europe during the low season. "Gazprom could ship the gas through Ukraine to Poland and on to Germany," it said, adding that the conflict will likely be resolved quickly.

Russia has cut gas supplies to both Ukraine and Belarus several times in recent years due to payment disputes, and many European consumers have suffered amid freezing winter temperatures.

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