Turkmen gas price for Russia could jump 30% in 2008 – Gazprom

Energy Trade

Turkmenistan plans to raise its natural gas price for Russia by at least 30% to $130 per 1,000 cubic meters next year, the CEO of Russian energy giant Gazprom said on Friday.

Turkmenistan supplies about 50 billion cubic meter of gas annually to Russia at $100 per 1,000 cubic meter under a 2006-2009 deal signed by Gazprom and the Central Asian state’s late leader Saparmurat Niyazov. “We have not given a final answer to our Turkmen colleagues... Talks will resume next week,” Alexei Miller said following talks in the Turkmen capital, adding the company needed time to assess the consequences of the move. The price rise will affect Ukraine, which buys Turkmen gas from Russia. Talks on a price formula for gas supplies to Ukraine in 2008 are under way between Moscow and Kiev. From early 2006 Ukraine paid an average of $95 per 1,000 cu m for a mixture of Turkmen and Russian gas supplied at the border. After the Central Asian state hiked its gas price, the rate for Ukraine was raised to $130 per 1,000 cubic meter from January 1, 2007. Ashgabat argues that Russia has also been raising energy prices for ex-Soviet republics and has pointed to rising gas prices on global markets. The average gas price for Europe is expected to hit $360 by the end of 2008.

The price issue has proved a stumbling block at talks on a new pipeline to pump 10-20 billion cubic meter of Turkmen gas along the Caspian Sea coast to Europe via Russia’s pipeline network. Russia, Turkmenistan, and Uzbekistan agreed on the project in May, but have failed to finalize it. Turkmen President Gurbanguly Berdymukhammedov and Russian Prime Minister Viktor Zubkov agreed at talks earlier on Friday to start the project ahead of schedule, i.e. before the H2 of 2008. Turkmenistan, the second largest gas producer after Russia among ex-Soviet states, exports gas via a Russian-controlled network of pipelines, but has been considering diversifying export routes.

Turkmen gas has been supplied via the 1974 Central Asia-Center pipeline, which runs through Uzbekistan, Kazakhstan and Russia. During talks between ex-Soviet states’ prime ministers on Thursday, the three countries pledged to speed up the network’s modernization and raise capacity by 20 billion cubic meter from the current 40 billion. (rian.ru)

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