Gasprom to make Turkmenistan to reduce gas prices

Gasprom will seek reduction of Turkmenistan gas prices through the court in Stockholm. Turkmenistan has accused the Russian side of failure to pay for the exported gas. Turkmenistan hinted that in this conflict Russia’s attitude towards Turkmenistan is the same as Ukraine’s to Russia.

Gasprom has filed a suit to the Stockholm arbitration with the demand to revise the gas price reported Forbes and Reuters quoting their own sources.

Gasprom Export confirmed that on June 8, 2015 the company has filed a suit to the arbitration to revise the price with Turkmengas. However, the company refused to comment on the details of the matter till the end of the trial.

Gasprom purchases Asian gas, in particular Turkmenistan gas, to resell it to Ukraine and Europe. Turkmenistan cannot sell its gas to Europe by itself, only Russia has the pipeline to Europe.

The information about the dispute between Russia and Turkmenistan has been posted on the site of the Turkmenistan Ministry of Oil & Gas Industry and Mineral Resources. Turkmenistan accused Gasprom of insolvency and claimed it is bankrupt, because of the sanctions. The Ministry has drawn this conclusion, because of the failure of Gasprom to pay for Turkmenistan gas since early 2015.

However, in reality Gasprom is not bankrupt. The company’s profit, certainly, goes down mainly because of reduction of gas prices. In addition to that, Ukraine started buying less gas. However, Gasprom sells Europe 160 billion cub.m. of gas and Turkmenistan buys 4 billion cub.m. of gas.

The reals reason of such a strange behavior of Turkmenistan is that this year Gasprom and the gas market have changed the rules of the games and this is fraught with serious financial losses for Turkmenistan.

Since 2009 Gasprom used to buy 10-11 billion cub.m. of gas a year from Turkmengas. However, early this year it announced its plan to reduce the gas purchase to 4 billion cub.m. in 2015. This meant that Turkmenistan’s incomes will go down by more than twice: from $2.4 billion to less than $1 billion with the gas price of $240 per 1000 cub.m. However, the price of $240 did not suit Gasprom, because in the current situation such a price is not competitive any more. Since January 2015 Gasprom has switched to the price, which made export to Europe breakeven.