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Turkmenistan To Restore Gas Supplies To Russia

December 22, 2009

(RFE/RL) -- Ashgabat and Moscow have agreed to renew Turkmen gas supplies to Russia by January 10.

The agreement, signed during a visit to Turkmenistan today by Russian President Dmitry Medvedev, follows a nine-month stoppage resulting from the rupture of the main Turkmen export pipeline to Russia. Turkmen authorities blamed Moscow for the incident, which stoked tensions between the two countries and came amid contractual disputes over the price Russia should pay for Turkmen supplies.

Medvedev's visit to Ashgabat today appeared intended to mend ties. It comes just over a week after Turkmenistan launched a new export pipeline to China that circumvented Russian-operated distribution networks.

During his talks with Turkmen President Gurbanguly Berdymukhammedov today, Medvedev described Turkmenistan as "a close friend."

"We have just discussed with you, esteemed Gurbanguly Maylikgulyyevich [Berdymukhammedov], the international agenda of the day. And we, indeed, have close or coinciding assessments of the main issues of the day, about how to establish security in the world and on our Eurasian continent," Medvedev said.

Pegged To Global Prices?

Accompanying the Russian president in Ashgabat, the deputy chief executive of Russia's gas giant Gazprom, Aleksandr Medvedev, said the two sides were planning to renew gas supplies "from January 1, 2010, but no later than January 10."

Medvedev said the deal will see up to 30 billion cubic meters (bcm) of gas supplied to Russia annually -- about two-thirds the level of recent years. The Russian president did not specify whether those volumes would be purchased over the next few years.

Medvedev also seemed to suggest the price Russia would pay for Turkmen gas would be pegged to global gas prices.

"For the first time in the history of Russian-Turkmen relations," he said, "gas supplies will be determined on the basis of a price formula which is in full agreement with the conditions of the European gas market."

Price formulation has been the key factor in the two countries' months-long dispute, with Turkmenistan insisting that Russia pay "European" prices according to an existing contract, and Russia insisting that the price should drop according to falling global gas prices.

Gazprom had been contracted to purchase up to 65 bcm annually from Turkmenistan through 2028.

But none of that gas has flowed since the rupture in April of the main export pipeline connecting Turkmenistan to Russia.

Losing $1 Billion A Month

Turkmenistan blamed Gazprom for causing the explosion by unexpectedly reducing the flow of incoming natural gas, leading to a rupture on the Turkmen side of the pipeline.

Analysts estimate Turkmenistan has been losing $1 billion every month due to the cutoff.

A new pipeline transporting Turkmen gas to China opened on December 14, breaking Russia's near monopoly over Central Asia's gas-export routes.

The pipeline, which will carry gas from eastern Turkmenistan through Uzbekistan and Kazakhstan into China's northwestern Xinjiang region, was launched during an inauguration ceremony attended by the Chinese, Kazakh, Turkmen, and Uzbek presidents.

According to plan, the Turkmenistan-China pipeline's full capacity of 40 bcm should be achieved by 2012.

A new pipeline to Iran, due to be launched later this month, will eventually send another 8 bcm of Turkmen gas to Iran.

Source: http://www.rferl.org/content/Turkmenistan_To_Restore_Gas_Supplies_To_Russia/1910511.html

Copyright (c) 2009. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.

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