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Gazprom Says Belarus Must Pay Debt as Putin Stood Up

May 28 (Bloomberg) -- OAO Gazprom said Belarus must pay its $192 million debt to the Russian gas-export monopoly before further cooperation as a customs union yoking the two countries and Kazakhstan falters on “fundamental” differences.

“We can’t cooperate with Belarus until they pay off their debt,” Gazprom spokesman Sergei Kupriyanov said by telephone today. Belarus’s debt may swell to $600 million by the end of this year, he said.

His commwents came after Belarusian Prime Minister Sergei Sidorsky boycotted a customs union meeting with his Russian and Kazakh counterparts, Vladimir Putin and Karim Masimov.

The three leaders met a week ago to discuss the union, which was scheduled to come into full force on July 1. While some customs issues dividing the partners were resolved, “sensitive questions of a fundamental nature remain,” Alexander Timoshenko, Sidorsky’s spokesman, said by telephone from the Belarusian capital Minsk.

Putin, who announced the creation of the customs union in June 2009, said after last week’s meeting that the troika would miss the July 1 deadline, and cited Belarus’s push for continued subsidized energy as a stumbling block in negotiations.

President Alexander Lukashenko yesterday said Belarus was prepared to cede control of pipeline operator Beltransgaz and an oil refinery in exchange for the right to pay domestic Russian prices for oil and gas, Interfax reported.

Europe-bound Gas

Russian Deputy Prime Minister Igor Sechin said today that it’s not yet economic feasible for Gazprom to increase its 50 percent stake in Beltransgaz, whose pipelines carry about a fifth of Russia’s Europe-bound gas exports, the Moscow-based news service reported.

Russia is unlikely to restrict gas deliveries if Belarus fails to live up to its contract with Gazprom, RIA Novosti reported yesterday, citing Sechin. Russia has cut gas supplies to Ukraine, disrupting deliveries to Europe, twice in the past four years, because of pricing disputes.

Putin said in March that Belarus will receive $4.2 billion in Russian subsidies this year through lower-than-market gas prices and tax-free oil deliveries. Gazprom also paid $625 million this year for 12.5 percent of Beltransgaz.

Sidorsky’s decision wasn’t connected to Lukashenko’s proposal, Dmitry Peskov, Putin’s spokesman, said by telephone. Russia and Kazakhstan will continue with talks, he said.

Peskov said Lukashenko’s offer “must be seriously studied” before any action is taken. “It’s clear that Belarus wants to get as much money as possible” for its assets, he said. “That’s entirely justified, but the sum must be reasonable. That’s what Igor Ivanovich was talking about,” he said, referring to Sechin.

Timoshenko said Lukashenko’s offer shouldn’t be confused with the customs union, “as these are different issues.”

Russia and Kazakhstan have agreed to jointly implement the new Customs Code for the union as a bilateral agreement starting July 1, Interfax reported citing Putin. Russia remains “open for Belarus’s ascension” to the Customs Union, the Russian news service quoted Putin as saying.

To contact the reporter on this story: Lyubov Pronina in Moscow at lpronina@bloomberg.net

To contact the editor responsible for this story: Willy Morris at wmorris@bloomberg.net

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