Russia to Control the Flows of Central Asian Gas to Europe
// Gazprom has monopolized supplies from the Central Asia
The Friendship of Nations
Russian Industry and Energy Minister Viktor Khristenko got a new telling argument to insist on doubling prices on the Russian gas for Ukraine at today’s Russian–Ukrainian talks in Kiev. Gazprom signed Friday a five-year contract on the transportation of the natural gas through Kazakhstan. Thus, the Russian gas monopolist has become the sole operator transiting the gas from Turkmenistan, Uzbekistan and Kazakhstan to Europe and left no options for Ukraine anxious to bargain on the prices.
Kazakh President Nursultan Nazarbaev and the country’s Prime Minister Danial Akhmetov negotiated with Gazprom CEO Alexey Miller on Friday. According to sources of Kommersant, the talks focused on Russia’s purchase of the Kazakh gas which is now mainly exported. The country produced 20.4 billion cu. meters of gas in 2004, 13.457 billion cu. meters – in the first half of 2005. Kazakhstan’s top officials would like to get no less that their Turkmen neighbors (Turkmenistan is paid $44 for 1,000 cu. meters). Gazprom, in its turn, would want to buy gas from Kazakhstan far cheaper.
A source of Kommersant informed on the progress of to the negotiations said that the parties had failed to settle the matter and decided to have extra talks. The participants of the discussion agreed to pursue “the joint marketing policy”, i.e. to keep the joint export channel provided by Kazrosgaz, the Russian-Kazakh joint venture. It means that not a cubic meter of gas will be sold without Gazprom’s consent.
The Russian and the Kazakh parties signed a package of contracts between Gazprom and Intergas Central Asia (the transportation subsidiary of Kazmunaygaz) to deliver the Russian and the Central Asian gas through Kazastan in 2006-2010. The documents envisages the rise in the transit of the Turkmen and Uzbek gas up to 55 billion cu. meters annually through the pipelines of the Central Asia-Center and Bukhara-Urals in Kazakhstan as well as the transit of the Russian gas by the pipelines of Soyuz and Orenburg-Novopskov (some 70 billion cu. meters annually).
The Kazakh Energy and Mineral Resources Ministry earlier reported the intentions to boost annual amounts of the gas transportation by the Central Asia-Center system to 80 billion cu. meters by 2010, which will take some $2 billion investment. The rise of the operating flow of the Central Asia-Center pipeline to 100 billion cu. meters will cost another $1.1 billion. Kazakhstan has planned to transport 116.7 billion cu. meters of gas by all gas mains in 2005.
Nursultan Nazarbaev said he is willing to expand the gas transportation facilities of the country by the funds of local companies, according to the information of Gazprom. Yet, Kazakh President tried to convince the Russian party that the prices on the transit should be raised. Gazprom declines to name the rate of the transportation tariff that was agreed on. “It is the matter of the commercial deal between the two companies, and we can only say that the prices are no worse that earlier. They satisfy the both parties,” Uzakbay Karabalin, the president of Kazmunaygaz, says. This tariff is lower than in Poland ($2.7 for 1,000 cu. meters for 100 km) but higher than in Ukraine ($1.09), according to the information Kommersant obtained.
Ukrainian top officials got concerned over the agreement between Gazprom and Intergas Central Asia. We should remind our readers that half a year ago Ukrainian President Viktor Yushchenko negotiated with Nursultan Nazarbaev the possible construction of a pipeline from Turkmenistan through Kazakhstan and to Europe. Ukraine strived to become an operator delivering the Kazakh gas to Europe and thus reduce its dependence on Gazprom. Gazprom’s recent accords with the Kazakh authorities do not bury Mr. Yushchenko’s plans altogether but hinder their implementation.
Among other things, Gazprom sealed a five-year agreement with Uztransgaz, the Uzbek transportation monopolist, to flush Turkmenistan and Uzbekistan’s gas through Uzbekistan in 2006-2010. The Russian gas giant earlier signed an agreement with Turkmen President Saparmurat Niyazov to purchase all the gas the country produces (60-70 billion cu. meters annually, starting from 2007).
Viktor Yushchenko called Nursultan Nazarbaev on Friday and invited him to visit Kiev on November 17-18 to discuss “the cooperation in the energy sphere”, according to administration of the Ukrainian president. Russia, however, may use its new trump earlier.
According to the information of Kommersant, Viktor Khristenko will be still offering Kiev the price of $160 per 1,000 cu. meters today at the talks on Ukraine’s purchases of the Russian gas. Gazprom insist that Ukraine’s demands to keep last year’s gas prices ($80 per 1,000 cu. meters) for 2006 are unfounded.
The Ukrainian Fuel and Energy Minister confirmed that the decision Russian and Kazakhstan made can impact the negotiation on the purchase of the Russian natural gas. “Ukraine could have agreed on extra supplies of the gas from the Central Asia, but after Kazakhstan and Gazprom signed the agreements we are actually stripped of a chance to buy gas in the region, independently from the Russian company,” they say at the ministry.
“Naftogaz Ukraine will evidently have to give up its blackmailing policy,” Igor Eremeev, a member of the fuel and energy committee of the Supreme Rada, told Kommersant. “Given that Gazprom has already contracted for all the transit of the alternative gas, the negotiations are most likely end up with a compromise.” Konstantin Borodin, the director of the Energy Research Center of Ukraine, shares this view: “Ukraine is in a difficult position. Gazprom has the full control of the transit and export of the Central Asian gas which is Ukraine’s only alternative to the Russian gas.”
Nataliya Grib; Oleg Gavrish, Kiev
All the Article in Russian as of Nov. 14, 2005
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