Russian gas company Gazprom has turned the screws on Ukraine by negotiating the purchase of all Europe-bound from Turkmenistan, according to a Turkmen State Information Agency report. That possibility was raised during talks held Monday between the officials of the Turkmen Ministry of Oil and Gas and a Gazprom delegation headed by deputy CEO Aleksandr Ryazanov. The proposed arrangement was for the sale of 50 billion cubic metres of gas per annum for the next three years. No details about the rates of payment have yet been revealed. Deputy Chairman of Gazprom Aleksandr Medvedev, who is often tipped as a potential future president of Russia, told a Ukrainian journalist on Monday that he expects a price to agreed no later than July 1.
Russia has been hoping for some time to expand the capacity of the Central-Asian Centre gas pipeline, but at the current stage it can transport only between 42 and 55 billion cubic metres of gas per year.
As things last stood, Ukraine had a deal with Turkmenistan, agreed in 2005, to receive 40 billion cubic metres of gas at $50 per 1000 cubic metres in the first half of 2006 and at $60 per 1000 cubic metres in the second half of the year. Meanwhile, Russia has a contract to be supplied with 30 billion cubic metres of Turkmen gas at $65 per 1,000 cubic meters in 2006.
With Turkmenistan currently selling more gas than it either produces or is able to physically export, quite a few eyebrows were raised when President Saparmurat Niyazov recently agreed on a gas deal with China. At the time, Ukrainian Fuel and Energy Minister Ivan Plachkov was sanguine about the prospect, citing Turkmenistan’s prospects for boosting its gas production:

“There will be some additional volumes [for Iran and China], because Turkmenistan plans to boost gas production considerably … Currently the [Swiss-based gas trader] Rosukrenergo is supplying gas to Ukraine. We have defined volumes and prices, and I do not see that anything has changed.”

A news report broadcast on Turkmen state television on April 18 showed footage of a new gas transport in the northern city of Dashoguz that is set to be commissioned in the near future. Fittingly, the Yilanly gas transportation facility was built with the assistance of Ukrainian specialists.
Another facility run by the Dashoguz Gas Supply enterprise was also completed recently, according to the television report. This facility will be able to transport around 90 million cubic metres of gas a day. However, these facilities notwithstanding, there seems little confidence Turkmenistan will be able to live up to its contractual obligations and aspirations any time soon.