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AFX News Limited
Russia, Turkmenistan, Kazakhstan agree landmark gas pipeline deal
05.13.07, 3:10 PM ET

TURKMENBASHI, Turkmenistan (Thomson Financial) - The presidents of Russia, Turkmenistan and Kazakhstan agreed a landmark gas pipeline deal yesterday in a victory for Moscow over European and US plans for the region.

During a three-way summit in the Caspian Sea port of Turkmenbashi, the presidents agreed on pipeline restoration and new construction from Turkmenistan to Russia via Kazakhstan -- a route long favoured by Russia.

'We will reconstruct the Caspian shore gas pipeline with a capacity of 10 billion cubic metres (per year) and build a parallel gas pipeline. The corresponding agreement will be signed before this July,' Russia's Vladimir Putin said.

Putin said concrete work on the project would begin in the first half of 2008, and would increase capacity along the route by at least 12 bln cubic metres per year by 2012.

The deal represented a major triumph for Moscow, which has long pushed the route over a rival US proposal that would cross the Caspian.

When asked about the trans-Caspian proposal, Turkmen President Gurbanguly Berdymukhammedov said: 'That project has not been cancelled,' Interfax reported.

Russian Energy Minister Viktor Khristenko spoke dismissively of the US proposal, however, saying: 'No such project exists today.'

'The legal, technical, and ecological risks are so great that finding investors, if this is not a political project... will be impossible,' he told journalists at the summit, Interfax reported.

Putin's three-way meeting with Berdymukhammedov and Kazakh President Nursultan Nazarbayev came amid a week-long tour of Central Asia meant to counter US and European influence in the Caspian region.

Nazarbayev sought to play down any perception of a contest, saying that it was 'natural and normal for all integrated states' to expand regional transport ties.

But in a clear sign of growing tensions over energy corridors, the presidents of Azerbaijan, Georgia, Lithuania, Ukraine and Poland held a rival energy summit on Friday and backed a planned oil pipeline bypassing Russia.

Yesterday, Putin said Russia's plans for the Turkmen energy sector did not end with pipelines.

'Russia is ready not only to invest in the transport system itself, but to extract gas in Turkmenistan,' Putin told journalists. 'Turkmenistan welcomes this investment.'

Alexei Miller, chief executive of Russian state gas giant Gazprom, said yesterday's agreement would allow Russia to raise its total imports of Turkmen gas 'to 80 billion cubic metres per year, in line with the contract we have until 2028,' Interfax reported.

Russia imported 41 bln cubic metres of gas from Turkmenistan in 2006, according to the Kremlin.

The new pipeline will be the first to be built in Turkmenistan since the 1970s, and will reinforce Russia's monopoly on exports of the country's vast gas supplies.

Russia relies heavily on Central Asian gas to make up for sluggish exploration and development of its own fields.




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