Turkmen-Russian gas cooperation: to be or not to be?
Ashgabat, Turkmenistan, Nov. 1
By Huseyn Hasanov – Trend:
Presidents of Turkmenistan and Russia, Gurbanguly Berdimuhamedov and Vladimir Putin are slated to have talks today in Moscow.
It is assumed that the presidents will also discuss resumption of gas cooperation, which was interrupted in January 2016.
“Key issues of bilateral cooperation will be discussed during the talks at the highest level,” the Kremlin press service said earlier.
Russia used to buy Turkmen gas and then re-export it through Uzbekistan and Kazakhstan via the Central Asia-Center (CAC) gas pipeline. However on January 1, 2016, Gazprom Export notified Turkmenistan’s Turkmengas State Concern about the pre-term unilateral termination of the gas purchase/sale contract signed in 2003.
Until 2009, Gazprom was the biggest buyer of Turkmen natural gas, with purchases reaching 40-42 billion cubic meters (bcm) a year.
Russia was buying Turkmen gas because it was cheap, and received big dividends by reselling the gas to the countries in CIS and Europe.
However, starting from 2009, the Turkmen side decided to sell natural gas at the prices set in the world market.
This was followed by Gazprom Export’s sharply reducing the intake of the Turkmen natural gas in April 2009. According to Ashgabat, this resulted in an explosion on the CAC gas pipeline. Therefore, the Turkmen gas supply was suspended, but resumed in early 2010 in much smaller volumes.
Despite the contractual arrangements, the gas supply first declined to 10-11 bcm a year during five years, while the annual supply volume decreased by more than 2.5 times in 2015.
Gazprom explained this decrease by a decline in demand for Russian gas in Europe and Ukraine. The gas price set by Turkmenistan did not suit Russia any more because of the fall in prices of exported gas in Europe due to the constantly falling oil prices.
After Russia stopped buying gas in early January 2016, Turkmengas stated its willingness to negotiate with Gazprom Export on a wide range of issues related to their economic ties.
“Turkmen enterprises continue cooperating with foreign companies concerning natural gas supply,” Turkmengas has said. “They understand that mutual interest and mutual benefit are the fundamental partnership principles. These important components of cooperation in the gas sector are mainly dependent on the financial and economic situation in the world.”
This is while it was reported in September that Gazprom agreed with Turkmengas to halt the purchases of Turkmen gas for two years.