Belarus's transition from communism to democracy proved to be more difficult than expected, economically as well as politically. What had once been a boon to industry in the Belorussian SSR--large volumes of inexpensive oil, natural gas, and electricity from the Russian Republic--quickly became a considerable problem for independent Belarus. Under the communist regime, industry had had no incentive to use fuels efficiently, modernize equipment, reduce pollution, maintain factories adequately, recycle, or allot energy resources efficiently. However, once Russian fuel prices began to approach world levels, Belarusian industry had to adjust in order to survive. Logic would seem to call for enterprises improving their industrial efficiency, but the oil refineries at Navapolatsk (capacity 22 million tons a year) and Mazyr (capacity 18 million tons a year), as well as many enterprises, cut their output instead. The 30 percent drop in energy consumption between 1990 and 1993 was the result of a drop in demand for industrial goods produced in Belarus, partly because of the chaotic state of the Soviet economy in the last years of the Soviet Union's existence, and partly because the Soviet Union no longer needed so many goods for its military.

By mid-1993 Belarus's debt to Russia for oil and natural gas had reached US$450 million. After several warnings, Russia temporarily cut off Belarus's supply in August and threatened to do so again on at least two other occasions. In an attempt to head off a crisis, government authorities resorted to allocating energy to priority sectors in 1994.

Russia's suspension of fuel shipments to Belarus yet again in September 1994 over unpaid fuel bills was the impetus for Belarus to sign an agreement giving the Russian state gas company ownership of its Belarusian counterpart, Beltransgaz, in exchange for the resumption of gas deliveries, but the agreement was not ratified by the Supreme Soviet of Belarus. Beltransgaz made additional offers of means of repayment, and Russia countered with conditions of its own and hinted that failure to meet these conditions would result in Russia's rerouting pipelines to Western Europe through either Lithuania or Latvia--a blow to Belarus.

Because delivery of natural gas in 1995 at lower-than-world prices was made contingent upon Belarus's timely payment of its bills, Belarus felt the need to diversify its sources of fuels. The government's long-term energy program, in place in early 1995, aimed to diversify its sources of fuels from such countries as Poland, Australia, Turkmenistan, and Norway.

In 1993 Belarus imported some 90 percent of its fuel from Russia via the Druzhba (Friendship) oil pipeline and the Northern Lights natural gas pipeline, both of which pass through the country en route to Central Europe. Refineries at Polatsk and Mazyr processed some of the crude oil for fuel, and the Polatsk refinery also provided raw material for fertilizer, plastics, and artificial fibers. In 1992 Belarus had 1,470 kilometers of pipeline carrying crude oil, 1,100 kilometers of pipeline carrying refined products, and 1,980 kilometers of pbf6 pipeline carrying natural gas.

In January 1995, Russia and Belarus signed an agreement under which Russia was to deliver some 66 percent of Belarus's yearly required crude oil at prices that did not exceed domestic Russian prices (which were set to rise significantly over the course of the year). In exchange, Belarus would export products to Russia, although finding enough products that Russia wants could be a problem.

Although Belarus imports most of its fuels, it has small deposits of oil and natural gas close to the Polish border, as well as oil shale, coal, and lignite. Belarus's production of 13 percent (2 million tons) of its crude oil production and 2 percent (2.4 million tons) of its natural gas consumption was stable in 1994.

Belarus also has a large supply of peat (more than one-third of the total for the former Soviet Union), which is used to power industry, heat homes, and fuel boilers at electric power plants. In 1993 thirty-seven factories produced about 2 million tons of peat briquettes.

In 1994 Belarus's twenty-two thermal power plants had a production capacity of 7,033 megawatts and produced 31,400 million kilowatt-hours of electricity. Additional small power plants had a total capacity of 188 megawatts. There were also nine small hydroelectric power plants with a total installed capacity of some six megawatts. All but three plants produced heat as well as electricity.

The country's power grid is connected to the grids of Lithuania, Russia, Ukraine, and Poland. Most electricity imports come from Lithuania (the Ignalina Nuclear Power Plant) and Russia (the Smolensk Nuclear Power Plant), but even here, Belarus has had problems in paying for its imports. In May 1995, Lithuania resumed electricity exports after more than two years Belarus agreed to make payment in Russian natural gas.

During the Soviet era, nuclear energy was promoted as an inexpensive source of electricity, but after the Chornobyl' accident, many people in Belarus were opposed to nuclear power. A nuclear power plant was under construction near Minsk in the early 1990s, and the country had no nuclear generating capacity at that time.

Data as of June 1995