Russia, Turkmenistan hasten Caspian pipeline work

Eric Watkins
Senior Correspondent

LOS ANGELES, Dec. 3 -- Russia and Turkmenistan have agreed to accelerate development of the proposed Caspian Gas Pipeline project following talks between OAO Gazprom Chief Executive Officer Alexei Miller, Turkmen President Gurbanguly Berdymukhammedov, and Deputy Prime Minister Tachberdy Tagyyev.

"Turkmenistan can start the implementation of the project earlier than it was initially scheduled," said Berdymukhammedov, referring to a declaration on the construction of pipeline signed May 12 by the Russian, Kazakh, and Turkmen presidents.

On completion in 2012, the pipeline will extend 510 km along the coast of the Caspian Sea—360 km via Turkmenistan and another 150 km through Kazakhstan—and connect with the existing Central Asia-Center gas pipeline network on the Russian-Kazakh border.

The decision to accelerate construction of the line followed reports that Gazprom on Nov. 27 signed a contract amendment for the supply of gas from Turkmenistan.

Under the amendment, the price of gas in first half 2008 will be $130/1,000 cu m and will rise to $150 in the second half. Starting Jan. 1, 2008, the rate will be determined by a price formula based on market principles. Earlier Russia and Turkmenistan had agreed on $100/1,000 cu m for the period ending in 2009.

"The price formula that will come into force in 2009 will define the price of supplies under a long-term contract up to 2028," said Gazprom's Miller. "The Turkmen side expressed the readiness to increase the volume of gas supply to Gazprom, compared with the volume of the current year."

Following the announced price increase, Viktor Chernomyrdin, Russia's ambassador to Ukraine, said the increase will be passed on to customers in that country, the main recipient of Turkmen gas via Russia.

"Naturally, the gas price for Ukraine will also be changed. We do not know yet what price they agreed upon," said Chernomyrdin, who expressed surprise at the new rate.

Contact Eric Watkins at hippalus@yahoo.com.

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