Review: Russia, Turkmenistan continue gas co-op talks

11 February 2019 11:16 (UTC+04:00)

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Russian company Gazprom continues talks with Turkmenistan, cooperation with which was suspended in 2016, Trend reports with reference to the Russian Foreign Ministry.

Turkmen President Gurbanguly Berdimuhamedov received Russian Foreign Minister Sergey Lavrov in Ashgabat Feb. 7.

"When President Berdimuhamedov was giving his assessment of the state of our relations, he particularly and with satisfaction noted the contacts with Gazprom, and the talks continue," the Russian minister was quoted as saying.

He said that these issues are to be handled by the Russian-Turkmen intergovernmental commission on economic cooperation, the meeting of which is being prepared.

Russia and Turkmenistan are the main suppliers of natural gas to the world markets among the CIS countries, but this fact did not prevent them from cooperating in fuel and energy for many years, and this was a strategic direction of activity. Russia used to receive the Turkmen gas in order to re-export it via the Central Asia-Center (CAC) gas pipeline passing through Uzbekistan and Kazakhstan, which appeared to be under the monopoly of Russia's Gazprom after the collapse of the USSR.

Russia was interested in purchasing cheap Turkmen gas at that time, as it received significant dividends by reselling it to the CIS and European countries.

The Turkmen side starting from 2009, gradually came to a decision to sell natural gas at reasonable prices in the world market. Gazprom Export LLC sharply reduced the volume of the received Turkmen natural gas in April of the same year, which led, as noted by Ashgabat, to an explosion on the CAC gas pipeline, and the supply of the Turkmen gas was suspended and resumed only in early 2010, but in much smaller volumes.

Despite the contractual arrangements, the volume was decreased at first to the level of 10-11 billion cubic meters per year for a period of five years, and the annual volume decreased by more than two and a half times in 2015. Russia explained the reduction in purchases by the decrease in demand for the Russian gas in Europe and Ukraine. The price of the Turkmen gas ceased to suit the Russian side due to the fall in gas export prices to Europe, tied to the constantly falling oil prices.

Gazprom Export LLC notified the Turkmengas State Concern of the early termination - starting from January 1, 2016 - of the 25-year contract on the sale of gas, signed in 2003. It was reported in September 2016 that Gazprom agreed with Turkmengas on a two-year pause in the procurement of the Turkmen gas.

In October 2018, chairman of the board of the Russian joint-stock company Gazprom Alexey Miller told the Turkmen Altyn Asyr TV channel that various aspects of the implementation of the current intergovernmental agreement between the Russian Federation and Turkmenistan on cooperation in the gas sector until 2028, including the issues of resuming purchases of Turkmen gas from January 1, 2019 were discussed in Ashgabat. However, the supply of Turkmen gas to Russia hasn’t yet been resumed.

The CAC gas pipeline system may potentially be used to deliver natural gas from Turkmenistan to the countries of Eastern Europe and the CIS, the Turkmenistan State News Agency reported earlier.

"In case of application of fundamental principles of the Energy Charter Treaty and reaching certain agreements with the transit countries, the CAC gas pipeline may potentially be used to deliver natural gas from Turkmenistan to the countries of Eastern Europe and the CIS," the report said.

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