October 25, 2016 / 10:46 AM / 3 years ago

Russia says ready to subsidize gas supplies to Belarus

MOSCOW (Reuters) - Russia will subsidize natural gas supplies to Belarus after Minsk settles an outstanding debt for past supplies, Russia’s deputy finance minister said on Tuesday.

Russian Deputy Finance Minister Sergei Storchak attends a televised debate as part of the St. Petersburg International Economic Forum 2016 (SPIEF 2016) in St. Petersburg, Russia, June 17, 2016. REUTERS/Stoyan Vassev/TASS/Host Photo Agency

The two countries have been at odds since the start of the year over how much Belarus should pay Gazprom for its gas after a slump in global energy prices.

However, Moscow is now ready to provide its neighbor with a subsidy or even a non-repayable loan, Deputy Finance Minister Sergei Storchak told Reuters.

“But this will be only after they pay,” Storchak said, referring to the initial refusal by Belarus to pay in full for Russian gas supplied this year.

Belarus said this month that it was poised to give Russia $280 million to cover shortfalls.

Russia has previously supplied gas to Belarus at prices lower than those it charged for supplies to the European Union and Ukraine, but this would be the first time Russia would make partial payment out of the state coffers.

The move comes at a time of budgetary crisis for Russia as it grapples with sustained economic weakness and low prices for oil, a key revenue earner.

Storchak declined to elaborate on the potential size of any subsidy, which Belarus would then channel to Gazprom.

Gazprom has previously charged Belarus $132 per 1,000 cubic meters of gas.

The refusal by Belarus to pay in full prompted Russia to cut oil supplies to its neighbor’s refineries in July, reducing them by 40 percent from the previous quarter.

Reporting by Elena Fabrichnaya and Andrei Makhovksy; Writing by Andrey Ostroukh; Editing by David Goodman

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