On Thursday, the Chechen state-run gas company Chechengazprom threatened Gazprom that it would stop the transit of Russian gas to Transcaucasian republics of Georgia, Armenia and Azerbaijan. In their opinion, Gazprom must pay them for the transit of gas across Chechnya.

“You have not yet signed a contract for the transit of the gas you supply to the Transcaucasian countries. As you ignore the legal demands of Chechengazprom, we warn you, in accordance with the regulations on gas supplies, that we will reduce the transportation of Russian gas until we stop it altogether starting at 10:00 Moscow time on March 3, 2004,” Vakhid Bersanov, General Director of Chechengazprom, said in a letter to Gazprom.

The demands of the Chechens contradict the norms of normal economic policy so much that it will be very difficult to react to them adequately, the newspaper says. Indeed, Chechnya’s debt for gas supplies by far exceeds gas transit fees. There are two state-run gas companies in Chechnya – Chechengazprom and Chechengaz. Over the past five years, they have been responsible for the transit of Russian gas across Chechnya, taking as much Russian gas as they needed.

Apparently, gas transit fees are incomparable with gas prices. Chechnya owes Russia about RUR 5bn (about $175.38m according to the current exchange rate) for gas supplies, while the cost of gas transit is no more than RUR 240m (about $8.42m). Until recently, the Chechens were satisfied.

“But now they want to continue taking Russian gas, at the same time receiving fees for the transit of Russian gas. The Energy Ministry will discuss this issue on Monday, and it seems the Chechens decided to carry out a PR action first,” a source in Gazprom told the Nezavisimaya Gazeta.

According to the contracts signed, Russia is to supply up to 8bn cubic meters of gas to Georgia, Armenia and Azerbaijan in 2004. The Federal Energy Commission’s tariff for the transportation of exported gas is just above $1 per 1,000 cubic meters/100km. In other words, the transit of Russian gas across Chechnya may cost $8m, which would be a generous gift to Chechengazprom from Gazprom.