Russia's gas monopoly Gazprom has accumulated extra gas reserves in European storage areas to guard against possible cuts to Belarus and reduced gas transit to Europe, an industry source said yesterday.
Gazprom, the world's largest gas producer, warned Belarus on Monday it would have to pay higher prices for gas from 2007 and cede control over its pipelines to the Russian firm or face reduced supplies from the New Year.
Relations between Moscow and its former ally Minsk have hit a rocky patch ahead of the deadline, reviving memories of Gazprom's New Year cutoff of supplies to Ukraine, which produced gas shortages in Europe in the middle of winter.
"Gazprom has stored much more gas than last year in Germany and Austria.
"These reserves can cover Gazprom's contracts in Europe for several weeks of reduced transit via Belarus in the worst case scenario," said a Russian gas industry source.
Like Ukraine, Belarus is a key route for Russian gas to Europe, although it ships much smaller volumes.
Gazprom supplies a quarter of Europe's gas needs. Its gas cuts to Ukraine last year prompted many European leaders to raise concerns over the continent's heavy reliance on Russia.
Belarus is a key transit route for Russian gas to Poland and to Germany, Gazprom's biggest client in Europe.
"Gazprom has this year stored more gas in Rheden and it also has a deal to store extra gas in Haidach," the source said
Rheden is the biggest storage facility of Wingas, a joint venture of Gazprom and Germany's petrochemical giant BASF. It can store up to four billion cubic metres of gas, or nearly five per cent of Germany's annual consumption.
Haidach is a gas storage facility in Austria, which is also controlled by Wingas. Wingas also controls SaltFleetby gas storage in Britain.
"SaltFleetby has never been used to cover continental needs, but it can be also seen as a cushion of sorts since it allows to supply more to Britain's market," the source said. A German gas industry source said Gazprom also had a deal to store gas with Germany's Verbundnetz Gas and increase supply if needed to five million cubic metres a day. Gazprom's source declined to comment on this deal.