Gasprom uses Kiev’s arguments in talks with Ashgabad

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The relationships between Gasprom and Turkmenistan have been undergoing a serious crisis. Commersant newspaper reported that after unsuccessful talks on reduction of the Turkmenistan gas price, Gasprom pays as much as it wants to since early this year. In fact Gasprom uses against Turkmenistan the similar strategy that Ukraine uses against it.

As a result Turkmenistan, which loses about $400 million this year, accusses Gasprom of failure to pay and threatens to take legal actions. But such a step could weaken Gasprom’s positions in Europe, though for years Gasprom has been convincing Europe of inviolability of the contracts.

“Since early 2015 Gasprom did not pay debt for the supplied Turkmen natural gas to Turkmengas state concern,” reads information posted on the governmental portal of the Turkmenistan oil and gas industry.  The Russian company “has become insolvent in its contracts for purchase-sale of natural gas, because of the ongoing world economic crisis and the economic sanctions introduced by the western countries against Russia.” Gasprom refused to comment on that.

Turkmenistan supplied gas to Russia since the Soviet times. After the USSR collapse Gasprom purchased up to 80 billion cub.m. of Turkmenistan gas a year. Since the beginning of the 2000s Gasprom and Turkmenistan has been arguing about gas price and the volume of purchases was going down.

By the end of the 2000s Gasprom introduced significant producing capacities in Yamal and demand for gas in Europe has gone down significantly. At first Gasprom reduced purchase of gas in Turkmenistan on a unilateral basis. Turkmenistan did not like it. However, in April 2009 there was an accident on the Middle Asia-Centre gas pipeline. The deliveries were resumed only in January 2010 after Turkmenistan agreed to reduce the volume of deliveries to 10 billion cub.m. a year. The last five years the volume of develiveries was the same, but in 2015 Gasprom insisted on buying only 4 billion cub.m. of gas from Turkmenistan.

Several sources familiar with the sitiuation told Commersant  that the current crisis is caused by the dispute about gas price. “According to the contract, we have the right to revise the prices, because of change of foreign conditions, but Turkmenistan ignores the attempts of dialogue,” said the source of the newspaper close to Gasprom. He said the monopoly pays for the Turkmenisan gas, “but it was forced to switch to netback payment (Gasprom’s price in Europeminus transportation costs) not to have losses. The sources of the newspaper do no mention the size of the debt.  Considering the volume of deliveries in 2015, the underpay could total $300-400 million.

Therefore, Gasprom has occupied the similar position to Turkmenistan as Ukraine against it in 2014. That time Kiev unilateraly paid for gas $268.5 per 1000 cub.m., considering the contract price  overvalued, but the Gasprom administration has repeatedly called this practice unacceptable.

Gasprom does not really need Turkmen gas. Lately the monopoly has expanded the gas supply system on the south of Russia and now supply of the North Caucasus and Stavropol does not depend on the Middle Asian gas.

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