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. Last Updated: 07/27/2016

Gazprom Signs Deal for More Uzbek Gas

Gazprom said Friday that it had signed a deal to buy more gas this year from Uzbekistan, helping to secure supplies for Ukraine under its controversial deal with trader Rosukrenergo.

The gas monopoly said it would buy 9 billion cubic meters of Uzbek gas in 2006, up from 8 bcm in 2005 and 5 bcm in the previous years.

Under Gazprom's Jan. 4 contract with Swiss-registered Rosukrenergo, the trader is to buy 41 bcm of gas from Turkmenistan, up to 7 bcm of Uzbek gas and up to 8 bcm of Kazakh gas for onward sale to Ukraine.

But until Friday's deal, which was signed at a meeting between Gazprom CEO Alexei Miller and Uzbek President Islam Karimov, Gazprom had not agreed to terms with Uzbekistan on supplying Rosukrenergo.

"We have a contract with Uzbekistan for 9 bcm. Up to 7 bcm of this amount will be sold to Rosukrenergo," said Gazprom spokesman Sergei Kupriyanov on Sunday. Gazprom owns half of Rosukrenergo.

Gazprom agreed to pay 25 percent more for Uzbek gas under Friday's deal, increasing the price to $60 per 1,000 cubic meters. Kupriyanov declined to disclose the price at which Gazprom would then sell the gas to Rosukrenergo, saying the figure was "a commercial secret." Rosukrenergo is to sell its gas to Ukraine for an average price of $95 per 1,000 cubic meters.

Gazprom is yet to finalize all terms with Kazakhstan for the Rosukrenergo deal, he said. So far, only the volume has been agreed on, he said.

President Vladimir Putin was due to meet with Turkmen President Sapurmurat Niyazov later Sunday and on Monday, as was Ukrainian Fuel and Energy Minister Ivan Plachkov, prompting speculation the Russia-Ukraine deal could be reviewed.

Kupriyanov said the meetings would not have any impact on the deal.

He declined to comment on press speculation that Gazprom was seeking control over Uzbek gas fields in return for Kremlin political protection for Karimov's regime. "Gazprom is involved only in supplies of gas," he said.

The gas giant could however sign new agreements on joint development on fields later this year, he said.

Kommersant reported last week that Gazprom wanted a de facto monopoly on gas exports from Uzbekistan. In return, Russia would help Karimov deal with protests and protect it from the West, the paper said.

Russia and Uzbekistan are currently preparing to sign a $1 billion production sharing agreement to develop gas fields in the west of the Central Asian country. Karimov's relations with the West have soured in the past year since Uzbek troops bloodily suppressed an uprising in the town of Andijan, but Moscow, keen to strengthen its position in the ex-Soviet world, has defended his actions.

"Gazprom looks set to increase its dominance of the Eurasian gas trade if reports that it is planning to acquire control of the Uzbek gas industry are correct," UFG said in a note. "Having access to growing Uzbek volumes would give Gazprom a better bargaining position with [neighboring] Turkmenistan."

Uzbekistan produces 55 bcm per year and consumes the bulk of the volumes at home.

(MT, Reuters)