An agreement is cheaper than money

Gazprom and Kazakhstan once again finally agreed on gas sales

The meeting between Vladimir Putin and Nursultan Nazarbayev was once again marked by the achievement of agreements on the terms of Gazprom’s purchase of Kazakh gas. This time, after the talks in Astana, Mr. Nazarbayev personally told reporters what he called “very good news.” However, the signing of a package of documents, which includes the creation of a joint venture on the basis of the Orenburg gas processing plant and the conclusion of long-term contracts for the purchase and processing of gas from the Karachaganak field, did not take place. According to Vremya Novostei, it is expected on May 21 in Moscow. However, as the practice of negotiations with Central Asian colleagues shows, there are no guarantees that all the necessary papers will be signed within the agreed time frame.

Last year, after meetings between Putin and Nazarbayev, the partners twice reported that they had reached final agreement on gas issues. The Gazprom board of directors even approved the deal to create the Roskazpererabotka joint venture on a parity basis, to which the concern would contribute the fixed assets of the Orenburg gas processing plant, and Kazmunaigas - 9.5 billion rubles. Moreover, he did this in a hurry for the visit of the Russian president to Kazakhstan, but in the end the signing of the documents never took place. Sources close to the negotiations claim that the Kazakh colleagues continued to stubbornly bargain for every dollar. And, apparently, they have achieved a slight increase in the base price compared to the $145 per thousand cubic meters agreed upon last spring.

At least the Minister of Energy and Mineral Resources of Kazakhstan, Baktykozha Izmukhambetov, transparently hinted at this. “As for Karachaganak gas, literally yesterday or today a new agreement was reached regarding the gas sales price. After we sign (the joint document - Ed. ), I will say. I can say that it is more than 145,” Interfax quotes him. “This is the price of dry processed Karachaganak gas, which will be supplied to European markets.” And the chairman of the board of Gazprom, Alexey Miller, refused to comment on the figures at all: “Let’s first wait for the agreement to be signed.” A source close to the negotiations claims that the scheme for processing and selling Kazakh gas has not undergone significant changes over the year.

It consists in the following. Gazprom sells 50% of the Orenburg gas processing plant to Kazmunaigas for $370 million and uses this money to increase the plant’s processing capacity. Another joint venture, Kazrosgaz, purchases all the gas that the consortium Karachaganak Petroleum Operating (KPO) produces at the Karachaganak field, delivers it to Roskazpererabotka and, after cleaning the blue fuel from impurities, sells it to Gazprom structures. About a year ago, the parties even agreed on the price at which the Russian concern would purchase Karachagank gas from Kazrosgaz - $145 per thousand cubic meters, which sources in Astana did not fail to report with pleasure. But it was not possible to determine the price at which Kazrosgaz would purchase from KRO. The Italian Eni and the British BG, each holding a 32.5% stake in the consortium, also wanted a share of the export margin. Sources claim that now the terms of the 15-year contract with KRO have been settled and it will be signed simultaneously with the documents on the creation of the joint venture.

Commercially, Gazprom will not suffer much from a price increase of 10-15 dollars (especially since half of this amount is its share in Kazrosgaz’s income). Reselling gas in Europe will make it possible to compensate for these losses, have additional volumes of gas in the portfolio, and at the same time maintain an export monopoly on gas from Central Asia. At the same time, the new price will obviously spur the price demands of other sellers in the region - Turkmenistan and Uzbekistan, which are currently selling raw materials to Gazprom at $100 per thousand cubic meters.

Understanding this, Moscow has already prepared a gift for the new Turkmen President Gurbanguly Berdymukhammedov - a promise to build the Caspian gas pipeline (along the existing branch of the SAC-3 pipe). This will be announced during the beginning of Vladimir Putin’s visit to Ashgabat. Considering that the late Saparmurat Niyazov unsuccessfully sought this gesture from Gazprom, the leadership of Turkmenistan can announce to its people an incredible success in the gas sector and the continuation of the great work of Turkmenbashi.

Alexey GRIVACHS