Russia’s state-owned gas conglomerate Gazprom has announced that it has received the first payment towards outstanding gas payments from Belarus, bringing an end to concerns that the dispute could lead to interruptions to gas supplies into Europe. Full payment of the debt is expected imminently.

Gazprom had been threatening to cut off Belarus’ gas supply if the bill remained unpaid, with the potential consequences being that Belarus could siphon off gas from pipelines that transport Russian gas exports into Europe.

The dispute was sparked off by a request made by Belarusian government to Gazprom for an extension to period in which they were required to make payments for gas deliveries made during the first half of the year. Belarus missed the agreed deadline on July 23, and wanted to extend payment terms until the end of the year.

The request to delay payments was seen as a form of retaliation by Belarus at Gazprom’s decision to increase gas prices. On December 31, 2006 Gazprom and Beltransgaz signed a gas supply and transit contract to cover 2007 to 2011. This agreement pushed up prices for Russian natural gas supplies from US$46 to US$100 per 1,000m3. However, Gazprom agreed to defer 45% of the payment from January 1 until July 23 when the full price increase would become effective.
In a statement released by the Russian supplier, Gazprom asserts: “Belarus obtained unprecedented beneficial terms and conditions for Russian gas purchases and a time period enabling to adapt to a new price.”

Gazprom has also transferred $625 million to the Belarusian government as the first payment towards securing a 50% stake in the gas transport company Beltransgaz. In total the stake is worth US$2.5bn, and Gazprom will make regular payments towards this stake over the next four years.