2.3.2. Gas Diversion and Interruption in 2003–2004

During 2002 and 2003, Gazprom tried to purchase a 50% stake in Beltransgaz, owner of the Belarusian transit network. At that time, Belarus was importing gas at Russia's domestic prices. Russia and Belarus did not agree on the price of Beltransgaz, so the attempted purchase failed, and Gazprom warned of a price increase in 2004 from \$30/1000 m<sup>3</sup> to \$50/1000 m3. Belarus refused, and Gazprom stopped the supplies to Belarus on 1 January 2004. Belarus started to divert Russian gas destined for Europe to domestic consumption. On 18 February 2004, Gazprom completely cut off the supplies to Belarus. In June 2004, Belarus agreed to the price of \$46.68/1000 m3 [34].

This was one of the earliest examples of the bargaining power held by transit countries: the diversion of supplies. It illustrates the importance of setting up an international framework to ensure uninterrupted supplies to the final importer during a dispute between an exporter and a transit country.
