Turkmenistan to resume gas supplies to Russia

December 22, 2009

Turkmenistan to resume gas supplies to Russia at European prices   

  Russia and Turkmenistan have agreed that the Central Asian state will resume natural gas supplies to Russia in January to deliver up to 30 billion cubic meters annually at European-level prices.

The countries’ gas monopolies Gazprom and Turkmengaz signed a deal on the sidelines of Russian President Dmitry Medvedev’s visit to the Turkmen capital , ending a months-long gas dispute between the two ex-Soviet states. Gazprom deputy CEO Alexander Medvedev told reporters that supplies will resume “on January 1 or no later than January 10, 2010” at a volume of up to 30 billion cubic meters of gas.

“For the first time in the history of Russian-Turkmen relations gas supplies will be carried out based on a price formula which is absolutely in line with European gas market conditions,” Medvedev said without elaborating further.

Russia paid $300 per 1,000 cu m of gas to the ex-Soviet state under the previous contract, importing some 50 billion cu m, or two thirds of its own production. Supplies were interrupted in April after a pipeline explosion.

Turkmenistan accused Gazprom of failing to warn that it was reducing gas imports, resulting in a buildup of pipeline pressure that caused the blast. Gazprom reduced imports after a drop in demand from European consumers amid the global economic crisis. Earlier this month, Turkmenistan and China unveiled a gas pipeline to run via Uzbekistan and Kazakhstan and bypassing Russia.

Turkmenistan and Kazakhstan are to supply 30 billion cu m of gas to China annually. The two countries said they had reached a deal on supplies in October, but announced in November they still had to agree on technical details.

Medvedev said Russia and Turkmenistan will jointly build new gas pipelines “across Turkmenistan further on to Europe.” And there are plans to prospect and produce hydrocarbons on Turkmenistan’s Caspian Sea shelf.

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