Gazprom’s Growing Tentacles

Natural resources juggernaut Gazprom has scored yet another victory in its gas pricing war, gaining 50 percent of the Belarusian pipeline network. The deal demonstrates Gazprom’s ruthlessness in securing power over neighboring former Soviet satellite states and raises questions about how reliable the Russian company is as an energy supplier to western Europe.

It was deja vu all over again. Just as Moscow twisted the valve on the pipeline carrying natural gas from Russia to Ukraine one year ago, it threatened to cut off supplies to Belarus on New Year’s Day. In the end, however, Minsk averted disaster by agreeing to double the bargain price it pays for natural gas from Kremlin-controlled Gazprom. Now, Belarus will pay $100 per 1,000 cubic meters of gas — still far cheaper than the price of $290 typically paid in Western Europe.

The tangle in Minsk highlights Belarus’s energy dependence on neighboring Russia. A sudden halt to cheap gas from Gazprom would deal a crippling blow to the country’s economy. German newspapers argue that the latest episode in Russia’s gas wars demonstrates that Gazprom is an unreliable energy partner for Europe.

Conservative Frankfurter Allgemeine Zeitung writes: “The people of Belarus were forced on New Year’s Eve to bid farewell to the much-loved illusion that they were faring well and that they had a functioning social security and pension system. It only functioned because of the massive profits Belarus was able to make from cheap Russian energy supplies.”

Spiegel