October 22, 2010 / 5:36 PM / 9 years ago

UPDATE 2-Turkmenistan eager to boost gas exports via Russia

* Russia wants part in Turkmenistan’s South Asia pipeline

* Russia wants to divert Turkmen gas flows away from China

* Russia says interested in buying more Turkmen gas

* China could import 40 bcm of Turkmen gas in 2012-2013

(Adds analyst comments, background)

TURKMENBASHI, Turkmenistan, Oct 22 (Reuters) - Turkmenistan is eager to boost gas exports via Russia, its leader said on Friday, only months after a pricing row shut deliveries and prompted the country to seek closer energy ties with China.

President Gurbanguly Berdymukhamedov made the comment during a meeting with Russian President Dmitry Medvedev but did not specify the volumes the ex-Soviet nation expected to ship next year to Russia, which was the largest buyer of Turkmen gas until flows were halted after a pipeline blast in April 2009.

Turkmenistan is Central Asia’s largest gas producer and holds the world’s fourth-largest natural gas reserves. As of Oct. 1, the country shipped 7.9 billion cubic metres (bcm) of gas to Russia, the world’s largest gas producer.

Russia’s top energy official, Igor Sechin, who accompanied Medvedev and met the Turkmen president, said Russia was interested in taking part in Turkmenistan’s Subcontinent pipeline project.

The Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, conceived in Soviet days, never got off the ground. But last month plans to build it were revived after the four countries signed an new framework agreement. [ID:nSGE68J0M0]

“The issue of Gazprom’s participation in the TAPI gas pipeline was discussed during this visit,” Sechin, told reporters.

“Gazprom may participate in this project in any capacity — builder, designer, participant, and so on,” said Sechin, adding Gazprom, (GAZP.MM), Russia’s state-owned energy giant, would consider importing more gas from its southern neighbour.

Gazprom expects to import between 10 and 12 billion cubic metres (bcm) of Turkmen gas this year, around 20 percent of the volume it used to receive before a pipeline blast disrupted flows in April 2009.

Gazprom, analysts said, has two main reasons for increasing involvement in Turkmenistan’s gas industry, which aims to triple its annual natural gas output of around 75 bcm within 20 years. [ID:nLDE69H0VP]

“First, it provides Gazprom with opportunity to retain influence in the region and make money by penetrating new gas markets,” said Valery Nesterov, Troika Dialog’s head oil and gas analyst.

“And second, it is in Gazprom’s interest to divert Turkmen gas flows away from markets desired by Gazprom, from Europe and from China. China is a coveted market for Russians and Turkmenistan has already taken out a big bite,” Nesterov said.

TURKMEN THREAT IN CHINA

Turkmenistan produces about 75 bcm of gas a year and Russia used to import two thirds of it, or 50 bcm. [ID:nLDE63F0DL]

But Gazprom stopped buying Turkmen gas for nine months after the pipeline explosion sparked a broader diplomatic row over gas. The move cost Turkmenistan about $1 billion a month, and the standoff prompted Turkmenistan to turn eastward.

In December 2009 Turkmenistan commissioned a 1,833-kilometre (1,139-mile) China-bound gas pipeline, which runs through Uzbekistan and Kazakstan to China’s north-western Xinjiang region.

China receives 24.5 million cubic metres of Turkmen gas a day via the pipeline. In 2012-2013 this will equal 40 bcm, almost as much gas as Russia used to import. Meanwhile, Russia is also attempting to boost its own gas exports to China.

“If Turkmenistan gets its own pipeline to India, or an alternative route westward, like it did with China, Gazprom can no longer negotiate from a position of power,” said Alexei Kokin, an oil analyst at Ural Sib.

“It is in Gazprom’s interest to control supply routes so that Turkmenistan can’t charge whatever price it wants in the market,” he added.

Russia has been in talks with China over large gas supply deals for years, and during a recent visit to Beijing, Gazprom officials said they cemented terms for a supply deal to sell 30 bcm annually by the end of 2015. [ID:nTOE68Q03P]

The two sides have still not settled on pricing terms, but Russia’s largest oil firm, Rosneft, has announced it is in talks with Gazprom, which has a monopoly on gas exports, to also sell gas to China. [ID:nLDE68T0PP]

According to consultants Wood Mackenzie, Chinese gas consumption is set to rise from 9 billion cubic feet per day (bcf/d) in 2009 to 43 bcf/d in 2030.

For more information on China’s options for gas supplies see factbox [ID:nTOE68D095]

Turkmenistan is also one of the preferred suppliers for the EU-backed Nabucco pipeline, intended to ship Central Asian gas to an Austrian gas hub via Bulgaria, Romania, Turkey and Hungary and reduce Europe’s reliance on Russian gas. [ID:nLDE68G0EG]

Nabucco shareholders have had a hard time clinching supply contracts as Russia moves in to lock in more Central Asian supplies and a fourth round of United Nations sanctions have axed the possibility of importing Iranian gas. [ID:nLDE67M0L8].

Gazprom’s head has said on several occasions that Russia is ready to buy all the gas Azerbaijan can offer as feedstock for its own pipeline project and rival to Nabucco, South Stream, for gas transit under the Black Sea to Europe. [ID:nLDE6820GJ] (Reporting and writing by Jessica Bachman; editing by James Jukwey)

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