Turkmenistan: Gazprom Won't Be Buying Gas from Ashgabat for the Rest of '09

Gazprom and the government of Turkmenistan have tried to turn over a new leaf in their contentious energy relationship. But the page is proving to be uncommonly sticky.

The Kremlin-controlled energy conglomerate has revealed that it will not be resuming purchases of Turkmen gas for the remainder of 2009, according to a report in the Russian newspaper Vedomosti.

Gas deliveries stopped in April of this year, when the main natural gas pipeline connecting the two countries was hit by an explosion. [For background see the Eurasia Insight archive]. The stoppage touched off a burst of mutual recrimination, with Ashgabat accusing Moscow of intentionally causing the explosion in order to coerce Turkmen officials into accepting a lower gas delivery price.

Since the spring, the two sides have haggled over the price of gas. Gazprom is eager to escape from under a pricing agreement, reached before the global financial crisis hit, in which it committed to paying a "European price" for Turkmen gas. Ashgabat, on the other hand, is not eager to see its earnings substantially slashed. [For background see the Eurasia Insight archive].

Gazprom was paying $375.50 per thousand cubic meters (tcm) of Turkmen gas, a source at the company told Vedomosti. That price, if accurate, would be far more than what Gazprom pays for equivalent volumes of gas from Kazakhstan ($217/tcm) and Uzbekistan ($210/tcm). Why Gazprom agreed to Turkmenistan's price, the source would not explain, the report noted.

When Russian President Dmitry Medvedev visited Turkmenistan earlier in September, many experts expected that the pricing dispute would be resolved. Turkmen President Gurbanguly Berdymukhamedov helped boost expectations by saying only "technical discussions" stood in the way of a full resumption of gas exports to Russia.

But the Medvedev visit proved inconclusive, and the pricing dispute continues. Gazprom officials now say the company simply doesn't have the money to buy Turkmen gas. Instead, Gazprom intends to increase the amount of Kazakh and Uzbek gas it buys because the rate is cheaper, Vedomosti reported.