Saturday, Apr 16, 2005
Alexei Miller, Gazprom's chief executive officer, returned to Moscow from Turkmenistan yesterday having convinced the central Asian republic to resume the delivery of natural gas to Russia's largest energy company. Delivery was blocked 17 weeks ago following a fight over pricing.
During talks at President Saparmurat Niyazov's palace in Ashkabad, the Turkmen capital, Mr Miller rejected a demand for a 30 per cent price rise.
But he conceded that Gazprom would pay the full Dollars 44 per 1,000 cubic metres cost of gas in cash rather than with the previous mix of cash and barter goods.
The new arrangement will last until the end of 2006, during which Turkmenistan has committed to deliver 17bn cubic metres of gas to Russia - 7bn c/m this year and 10bn c/m in 2006.
Nevertheless, there remains some doubt whether the deal will resolve the crisis that began on January 1 when Turkmenistan blocked gas deliveries to Russia.
The wording of a Gazprom statement - that Mr Miller and Mr Niyazov had "reached understanding that in future all contracts would be strictly observed, including agreements on gas prices for Russia" - was similar to one issued after talks in February that failed to induce Turkmenistan to turn the gas tap back on.
Turkmenistan wants to reap the benefits of record gas prices in Europe where Russia earns around Dollars 20bn (Euros 15.4bn, Pounds 10.5bn) a year. But Gazprom is not inclined to share export outlets. State regulated gas prices in Russia fall well short of the Dollars 58 per 1,000 c/m Turkmenistan is seeking.
The onset of spring, when Russian gas demand drops, weakens Turkmenistan's position. Bargaining will begin next year when talks on a larger Russian-Turkmen gas contract for 2007-2028 open. Russia plans to boost imports from Turkmenistan tenfold in that period.
Smaller volumes are also being purchased from neighbouring Kazakhstan and Uzbekistan as part of efforts to strengthen its hold over former Soviet central Asia. Russian pipelines also transport central Asian gas to Ukraine.
Gazprom has taken over operatorship of the Kazakh and Uzbek sections of a large but decrepit pipeline that for now is the only export outlet for central Asian gas.
By ISABEL GORST
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