Gazprom, the Russian natural gas monopoly, has finally lost patience with the debt-ridden former Soviet republic of Belarus, and has cut supplies to the country by 30 per cent. The company says it is owed $280 million for gas already supplied to the country, despite Belarus paying just $30/1000 m3, rather than the normal price of $50.

Rem Vyakhirev, the head of Gazprom, slammed his government’s interference in the economy of Belarus, which he said was having a damaging effect on his company’s commercial affairs because of the rising tide of foreign debt.

Keeping creditors at bay is proving to be an uphill struggle for Belarus. Belarus also owes an estimated $80 million for electricity supplied from Lithuania.

Keen not to be deemed impervious to the plight of its energy producers, the Russian government has stepped up its public display of determination to overcome the crisis in its energy sector. Prime minister Sergei Stepashin travelled to the Ukraine to solve several bilateral problems, including Kiev’s debts for the supply of Russian power. Ukraine was urged to take urgent steps to settle a $3 billion bill for fuel.

Russian oil exports are up sharply this year on the back of a stronger than expected price for crude, but this situation is vulnerable unless fiscal stability is restored. The situation is similar for the gas industry. Unless radical steps are taken, investment in Gazprom could fall to half what it requires.

There was good news for Russia elsewhere. Mongolia has expressed its eagerness to cooperate in providing a conduit for a proposed energy corridor between Russia and China. The plans include a $1 billion gas pipeline from eastern Siberia to northern China, and another project to link the two countries by a high voltage transmission line that passes through Mongolia.