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Gazprom: Central Asian gas purchase prices to double in 2009

Energy Trade

Gazprom expects the price of gas it buys from Central Asia to at least double next year, the Russian gas monopoly's CEO said Tuesday.

Alexei Miller discussed the trend for Central Asian gas producers to raise prices with Prime Minister Vladimir Putin. “Against the backdrop of high gas prices in Europe, the intentions of Central Asian countries to raise gas purchase prices seem absolutely well-founded. Therefore, we can expect the purchase prices in these countries to more than double in 2009 compared to the levels at which Gazprom has bought gas this year,” Miller was quoted as saying by the governmental press service.

He said the Gazprom-controlled Central Asia-Center pipeline system would be the most commercially attractive route for the deliveries of Central Asian gas to external markets and added that Gazprom could expand purchases in gas-producing countries for subsequent sales on world markets. A major European supplier, Gazprom buys Central Asian gas at lower prices than it sells to Europe. The expected increase therefore promises a knock-on price rise for European consumers.

Gazprom earlier started talks on buying Azerbaijani gas at market prices in 2009. In November 2007, Gazprom and Turkmenistan signed a supplement to their contract on natural gas supplies. Under the document, gas from the Central Asian state would be supplied at $130 per 1,000 cubic meters in the H1 of 2008 and at $150 per 1,000 cubic meters in the H2.

Starting from January 1, 2009, the price of natural gas from Turkmenistan will be determined by the market. The price formula from 2009 will be set by a long-term contract that expires in 2028. Gazprom purchases 50 billion cubic meters (bcm) of natural gas from Turkmenistan annually under an agreement that expires at the end of the year. Gazprom also reached agreement with Uzbekistan in late December on bringing the price of Uzbek gas into accordance with the regional conditions.

Gazprom is believed to be paying $180 per 1,000 cubic meters for Uzbek gas against $100 last year. Russia transits up to 55 bcm of gas from both Turkmenistan and Uzbekistan via Kazakhstan under a 2005 contract. (rian.ru)

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