Translated material
Untested by time
Gazprom and Turkmenistan cannot agree on supply guarantees
On Friday, July 4, Russian President Dmitry Medvedev will pay a working visit to Turkmenistan on his way to the G8 summit in Japan. The key topic of negotiations with his colleague Gurbanguly Berdimuhamedov will be cooperation in the energy sector, which has recently looked very ambiguous . Russia, represented by Gazprom, remains the largest buyer of Turkmen gas, but Ashgabat is actively trying to diversify energy export routes, taking advantage of rising prices for its gas and the political weight of Turkmenistan in the region. Yesterday, as part of preparations for the visit of the Russian president, Mr. Berdymukhamedov received the chairman of the board of Gazprom, Alexei Miller. The parties have not yet agreed on the terms of cooperation next year. And according to Vremya Novostei, there are still significant differences in approaches to it.The main point of disagreement is not even the price , but the most important principle for the Russian concern is the long-term guarantee of supplies from Turkmenistan. Ashgabat wants to receive a price calculated on the basis of net back from the European price (that is, minus transportation), but without providing such guarantees. In other words, continue to work on the basis of one-year contracts, agreeing on a specific price each time, with the possibility of adjusting it during the year in the event of a significant increase in the cost of gas in Europe. For example, at the end of this year the price in Europe will be $400 per thousand cubic meters. The cost of transportation from the border of Turkmenistan with Uzbekistan to the Czech-German border (reception point Waidhaus) is about 70-75 dollars. That is, taking into account Gazprom’s margin, we can predict an increase in the purchase price to 280-300 dollars per thousand cubic meters. True, transit rates in Ukraine, Russia, Uzbekistan and Kazakhstan may also increase significantly. If they double, Ashgabat will be able to claim 240-250 dollars per thousand cubic meters.
Gazprom is theoretically ready to agree to such prices, but it needs a real long-term contract - with a price formula and strict obligations on the part of the supplier. So that the gas that today goes into the portfolio of the Russian concern does not one day become a raw material base for new export projects from Turkmenistan (the Chinese corridor already under construction or the Trans-Caspian or Trans-Afghan gas pipelines being discussed). Even the conditional risk of such a development of events imposes significant restrictions on Gazprom, since it is forced to refuse investments in expanding the infrastructure for Turkmen gas and look for possible production reserves to compensate for the failure to fulfill obligations on the part of Ashgabat.
These disagreements can also be traced in the official statements that Gazprom and the press service of the President of Turkmenistan exchanged following the meeting. Miller and Berdymukhamedov. In a message from Ashgabat, Mr. Berdymukhamedov calls Gazprom "Turkmenistan's leading strategic partner." But it is said that the president “informed Alexey Miller about plans for cooperation in the fuel and energy sector and Ashgabat’s desire to build a partnership in accordance with the situation on the global energy market.” It is especially emphasized that the parties also expressed their readiness to revise natural gas prices for 2009 in accordance with global market conditions. At the same time, it was separately noted that among the promising gas export projects, Ashgabat has already identified a gas pipeline to China. Negotiations are also underway on gas pipeline projects: the Trans-Caspian - for European purposes, and the Trans-Afghan - for Asian purposes. At the same time, a press release from the Russian monopolist states that “the parties are completely satisfied with the way the interaction between Gazprom and Turkmenneftegaz is developing on the basis of a long-term contract for the purchase of gas.” “Gazprom and Turkmenistan are reliable and time-tested partners,” it quotes Mr. Miller as saying. “We are confident that our cooperation will only strengthen and develop.”
A long-term contract with Gazprom would force Turkmenistan to present to other counterparties an audit of reserves and real production development plans that could provide new routes with gas for at least 25-30 years in the future. The lack of guarantees for Russia allows for parallel negotiations with other potential buyers, primarily the European Commission, which is trying to create a political platform for the supply of Turkmen gas to the EU, bypassing Russia.
In addition, it can be stated that the agreement on strategic cooperation in the gas sector, which was signed in 2003 by the former presidents of Russia and Turkmenistan Vladimir Putin and Saparmurat Niyazov, is in fact not being implemented. As is known, it assumes an increase in Gazprom's purchases of Turkmen gas in 2008 to 70-80 billion cubic meters, and in 2009 - to 80-90 billion cubic meters. However, practically no efforts were made by the parties to implement these agreements; supply volumes remain at 40-42 billion cubic meters per year.
Even for a new (hypothetical) gas export project towards Russia - the Caspian Pipeline - Ashgabat agreed to guarantee only 10 billion cubic meters of gas per year, which is stated in the text of the intergovernmental agreement. However, since its signing in December last year, no specific work has been carried out on the project.
All these issues will obviously be on the agenda of negotiations between Dmitry Medvedev and Gurbanguly Berdimuhamedov, but there is no hope for a quick solution. So far, Turkmenistan has only confirmed its readiness to fulfill its gas supply obligations in the second half of this year (about 21 billion cubic meters) at the previously agreed price of $150 per thousand cubic meters. In the first half of the year, as is known, it was $20 less.