Eric Watkins
Senior Correspondent
LOS ANGELES, Apr. 18 -- Russian natural gas giant OAO Gazprom will resume receiving supplies of natural gas from Turkmenistan after the countries ended a 17-week stand-off over the price.
In talks with Turkmenistan's President Saparmurat Niyazov last week, Gazprom CEO Alexei Miller agreed that the Russian firm would pay a full cash price of $44/1,000 cu m instead of by a combination of cash and barter goods as before.
Turkmenistan had been demanding a 30% price rise over the original contract price of $44/1,000 cu m, which the Russian firm had declined to pay, leading to the stand-off (OGJ, Feb. 14, 2005, p. 29).
The new arrangement will last until the end of 2006, during which Turkmenistan has committed to deliver a total of 17 bcm of natural gas to Russia, 7 bcm in 2005 and 10 bcm in 2006.
After completion of that contract, Russia is expected to seek a rise to 70 bcm/year from Turkmenistan, which has the second-largest reserves of natural gas in central Asia.
Turkmen supplies enable Russia to meet its own domestic requirements and to supply natural gas to Europe, which purchased 157 bcm in 2004 at a reported price of $20 billion.
Turkmenistan would like a share of that market, but it has no alternate means of exporting its natural gas except via Russia.
In March, Niyazov underlined the importance of his country's natural gas and the need for it to seek alternatives to the Russian market and pipeline system.
"The audit of Turkmen natural gas and oil reserves carried out by British and US companies showed that reserves are sufficient to provide some 200 bcm of Turkmen gas annually for the next 100 years along various export routes," Niyazov told Turkmen TV.
As a result, Niyazov said, Turkmenistan will work further with Afghanistan, Pakistan, and possibly India on the Trans-Afghan gas pipeline with an initial capacity of 30 bcm.
Russian concerns
Meanwhile, Russia is reported to to be concerned over its supplies of natural gas from Turkmenistan due to the uncertainty raised in Central Asia by last month's coup in Kyrgyzstan, which toppled the government of former President Askar Akayev (OGJ Online, Apr. 5, 2005).
"Turkmen gas is constantly kept track of on the Gazprom balance sheet, and we have practically no alternative today," said I. Yusufov, special representative for international energy collaboration of Russia's President Vladimir Putin.
"The enormous quantities of gas that we receive from Turkmenia cannot be replaced quickly with other sources," Yusufov told Moscow's Nezavisimaya Gazeta.
