Breaking Gas Deals
Gas talks between Turkmenistan and Russia took another twist on Thursday as Ashgabat announced that it would cut off gas deliveries from September after negotiations to reach a new price deal collapsed, Reuters reported. The failure of these talks bodes ill for Europe, whose gas supplies rely to a great deal upon the Turkmen gas, which affords Russia the ability to spare capacity for export. As Gazprom CEO Alexei Miller remarked after talks with Turkmen President Saparmurat Niyazov:
“No agreement was reached on the price and the talks have been suspended.”
Turkmenistan planned to force Gazprom to increase payments for gas from the $65 per 1,000 cubic metres to $100 from next month. To date, Gazprom has been able to dictate price negotitations as it has control over the most important pipelines out of Turkmenistan. As the Reuters article notes “European Union politicians want Russia to ratify a treaty which would allow buyers to negotiate gas prices directly with Central Asian states, but Russia has so far refused”.
on June 30th, 2006 at 8:57 am
It seems to me, Turkmenbashi is craftily taking advantage of gas accords that have been recently signed with China. He appears to get the powerful leverage into his hands. In the run up to the G-8 summit this looks like a blow to Russia that will undermine its power in the energy security talks, the top item on the summit’s agenda. For Russia, seeking to position itself as a country capable of delivering energy security to international markets, unsettledness of gas disputes with Turkmenistan is something it has to care about strongly. The crux of the matter is a price Gazprom has to pay for Turkmen gas. Gas is there but too high a price is going to eat into the significant part of Russian monopolist’s profits. This is what really upsets Gazprom. The strange thing is that Russia has so indulged in “no-more-subsidies-to-gas-consumers” rhetoric that it takes no notice of the fact that it itself is subsidized when importing Central Asian gas at cheap prices. A double standard at work, isn’t it?
on June 30th, 2006 at 5:21 pm
Still - Turkmenbashi alone produces more than enough gas to go round everyone.