Explosion at the pipeline advantageous to Russia, Turkmenistan: expert

Oil&Gas Materials 11 April 2009 13:15 (UTC +04:00)

Mishail Bushuyev, Deutsche Welle

Chatham House Expert Institute Researcher Yuriy Fedorov comments the aggravation of relations between Moscow and Ashgabat on the light of recent explosion at the Middle East Centre pipeline.

Deutsche Welle: Commentators are already talking about a gas war between Moscow and Ashgabat. Who will benefit?

Yuriy Fedorov: "I think that is actually beneficial to both sides. The Turkmen leadership needs to find any convincing evidence that long-term relationship between Turkmenistan and Russia unprofitable and dangerous. I think the fact of explosion is not so relevant, as Turkmen Foreign Ministry's reaction due to Gazprom's unbecoming conduct".

The fact is that Turkmenistan has recently made a decision to construct the East-West gas pipeline, which will connect new fields in the Iolotano region of the Caspian Sea coast. The new gas pipeline should not be connected with the projecting Caspian gas pipeline, which will transport Turkmen gas to Russia. However, Turkmenistan stands for the Transcaspian gas pipeline, which is completely unprofitable to Russia. This is along standing conflict situation. The reaction, rather than the fact of explosion, proves that Turkmenistan was ready to such a tough relations with Russia and to make Russia responsible for all the accidents.

I feel there is not unanimity among the elite on the Transcaspian version. This is beneficial for elite, which stands for cooperation with Europe, for participation in Nabucco project and for construction of the Transcaspian gas pipeline. The problem is that Turkmenistan believes that Europe must construct and finance the gas pipeline.

Q: Is the evolving situation is suited to Gazprom?

A: Currently Gazprom purchases Turkmen gas for $240 per 1,000 cubic metre. Gazprom must export this gas to the Ukrainian border and sell it to Ukrainian colleagues. The prices for gas, which Gasprom delivers to Ukraine, will fall due to fall in prices for oil. Oil prices fall and respectively the price for gas, which Gazprom delivers to Ukraine, will fall shortly. Thus, Gazprom wants to avoid loss. It wants to benefit by cutting Turkmen gas, as Ukraine is reducing the purchase of Russian gas under the known agreements.

The current obscure situation is advantageous to both sides. Both of them will accuse partner of breaking agreements, default of technical terms to supply gas or purchases, transportation and etc. This will allow Gazprom to cut gas purchasing and reduce its losses. Turkmenistan will find enough reasons to agree with Europe to construct the Transcaspian gas pipeline.

Opinions expressed in this article may be different of those held by Trend .