Turkmen-Ukraine Gas Deal Some Way Off

Turkmen-Ukraine Gas Deal Some Way Off

Thursday, 8 October, 2009
Ukraine has been making advances to Turkmenistan in an attempt to break Moscow’s grip on energy supplies, but NBCentral Asia experts doubt the offer will be taken up in Ashgabat.

At an October 1 press conference in Kiev, Ukrainian president Viktor Yuschenko said direct supplies of Turkmen gas were likely to resume after a nine-year break. However, in comments cited by the Neftegaz energy website, the Ukrainian leader did not elaborate on how this would work.

Until 2000, Ukraine bought around 35 billion cubic metres of gas a year from Turkmenistan. The gas was routed through pipelines crossing Russia, which earned a transit fee, but the purchase contract was between Ukraine and Turkmenistan.

However, in early 2000, the Russian energy giant Gazprom took control of Turkmen gas exports via this route, buying the gas and selling it on to Ukraine. Kiev’s contractual relationship was now with Moscow rather than Ashgabat.

Over the past few years, Ukraine has bought around 40 billion cu m of gas from Gazprom annually. Turkmen gas now forms part of the general mix of Russian exports to western Europe as well as Ukraine.

The Ukrainians are keen to be less wholly reliant on Moscow for their energy, and to pay less for it if they can.

“Yuschenko would like to halve purchases of Russian gas and is taking various steps to achieve that,” said a source in the Turkmen oil and gas ministry. “But it may also come down to some basic haggling – Ukraine gets Turkmen gas as an alternative option, and seeks a price cut for Russian gas.”

Official figures from Gazprom show that Ukraine was being charged 360 US dollars per 1,000 cu m in the first quarter of 2009. From next January, however, the company plans to charge the Ukrainians the going rate for other European consumers, which will be significantly higher.

NBCentralAsia experts say it will be difficult for Kiev to re-establish a direct contractual relationship with Ashgabat. The Turkmen authorities have yet to respond to Yuschenko’s advances, and they are already bound by supply contracts with Russia.

In April, Gazprom halted purchases of Turkmen gas over a pricing dispute. The Turkmen said the stoppage caused an explosion on the Central Asia-Centre pipeline, which required expensive repairs.

“Ukraine has only one option,” said another official at the ministry. “That means the same deal as before [buying from Gazprom] at the same prices. They won’t get anything out of trying to bypass Russia.”

The official pointed out that ahead of Yuschenko’s visit to Ashgabat on September 14-16, there was speculation that Ukraine might start receiving Turkmen gas, yet in the event the issue was not discussed in his talks with Turkmen president Gurbanguly Berdymuhammedov.

“At the moment, Kiev has no realistic chancing of achieving a degree of independence from Russian gas,” said Annadurdy Khajiyev, a Turkmen economic analyst based in Bulgaria. “Of course, Kiev could follow the foolish example of Bulgaria, and sign a contract for a specific volume of gas. But how would you transport it [without Gazprom’s approval]? That’s the big question.”

(NBCentralAsia is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service has resumed, covering Uzbekistan and Turkmenistan.)

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