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Turkmenistan Gas Ends Russia-Ukraine Gas Dispute

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Speaking figuratively, Turkmen gas has evolved from the “apple of discord” between Russia and Ukraine in their “energy” dispute to a peculiar ring-buoy virtually in few days of the first month of 2006
The point is that a gas dispute that flared up between two neighbors bore, at first sight, a rather distant relation to Turkmenistan. Certainly, Ashgabat could not remain indifferent to the way the main consumers of Turkmen gas try to come to an agreement. On the other hand, however, Turkmenistan signed contracts both with Russia and Ukraine on the New Year’s Eve and, therefore, had reasons to be optimistic about near future. According to the signed agreements, Naftogaz Ukrainy undertook to buy 40 bln cub.m. of Turkmen gas in 2006 and 30 bln cub.m were contracted by Gasprom. However, since gas from Turkmenistan should transit territories of several countries, including Russia, before it gets to Ukraine Kiev and Moscow had repeatedly raised the issue of Turkmen gas while trying to come to understanding over the complex transit problems. Both sides claimed they received Turkmen gas in the first two days of January and used this fact as a trump in proving their case. Let us remind you that the point of dispute was, in particular, about whether Ukraine conducted unauthorized diversion of Russian gas intended for European customers.

When Moscow and Kiev finally announced that they found a mutually acceptable solution to a deadlock situation it became clear that it was Turkmen gas that helped settle a conflict. RosUkrenergo company, which was set up at the end of 2004 as a joint venture owned by Gazprombank and Austria's Raiffeisen Bank to handle natural gas imports from the border of Turkmenistan to Russia, Ukraine and other European countries, was named the only supplier of gas to Ukraine. When RosUkrenergo was set up, its owners said the company would not only invest in increasing the capacity of the existing gas transportation network between Turkmenistan and Europe but also in constructing new pipelines.

By the way, Turkmen President Saparmurat Niyazov has emphatically proposed to Russian and Ukrainian representatives to join efforts and lay a new pipeline along the eastern coast of the Caspian Sea through Kazakhstan,which will make it possible to increase supplies of Turkmen gas in the northern direction. In Turkmen leader’s opinion, this project should be started beginning today, taking into account prospects of European countries’ demand for this ecologically clean fuel. Some observers believe that the current Russian-European conflict may push all interesting parties to adopt a decision on this project.

Coming back to the Russian-Ukrainian agreements, it has to be stressed that the transition to market prices of fuel for Ukrainian consumers and the same market tariffs of gas transit from Russia to Europe through Ukraine will be ensured by… Turkmenistan with its fairly cheap gas.

RosUkrenergo will supply gas to Ukraine at US $ 95 per 1000 cub m for five years, heads of Gasprom and Naftogas Ukrainy said. At the same time, the difference in cost of Russian gas purchased by RosUkrenergo at US $ 230 and cost of gas supplied to Ukraine will be compensated by purchases of Turkmen gas.

Apparently, the observers were right in predicting the growing role of Turkmenistan in the formation of the gas balance for Russia, Ukraine and European countries as well as its growing importance in the world market. The Ashgabat call for mutually beneficial and honest partnership was very timely. As Turkmen President Saparmurat Niyazov emphasized recently, “we are ready to expand cooperation with our partners not only in the field of purchase and sell of gas but also in joint exploration of resources in the Caspian Sea and on the right bank of Amu Dariya river and combining efforts on creation new routes for Turkmen gas shipments to the world markets.”

Igor SOLOVIYEV, Internet newspaper Turkmenistan.Ru
04 January 2006