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. Last Updated: 07/27/2016

Turkmenistan Confirms Gas Deliveries

Itar-TassBerdymukhammedov greeting Prime Minister Mikhail Fradkov at the presidential palace in Ashgabat on Thursday.
Turkmenistan confirmed its commitment Thursday to deliver gas supplies to Russia until 2028, Gazprom said in a statement.

In August 2003, Gazprom concluded a 25-year gas supply contract with Turkmenistan. Under the original terms of the agreement, Turkmenistan promised to deliver 60 billion to 70 billion cubic meters of gas in 2007, increasing the amount to between 63 bcm and 73 bcm in 2008.

The latest understanding between the two parties, discussed in a meeting between Turkmen President Gurbanguly Berdymukhammedov and Gazprom CEO Alexei Miller on Wednesday, could put third parties hoping for access to Turkmen gas supplies out of the running.

Yet despite its assurances of cheap gas supplies, Turkmenistan delivered only 42 bcm of gas to Russia last year, while 50 bcm is planned for this year, at a price of $100 per 1,000 cubic meters, said Valery Nesterov, oil and gas analyst at Troika Dialog.

It is also unlikely that Turkmenistan will be able to deliver 80 bcm of gas to Russia in 2009, as required by the agreement, Nesterov said. Without reform and foreign investment it will be difficult for Turkmenistan to fulfill this obligation, he said.

Experts say that these problems also make the likelihood of Turkmenistan enabling the European Union to diversify its energy supplies in the near future a remote one.

"There is a serious misunderstanding by some in Europe that Turkmenistan in particular, and the Central Asian region in general, will somehow act as an energy savior for Europe," said Andrew Stroehlein, media director of International Crisis Group, which released a new report on Turkmenistan on Monday. "Such a hope unrealistically overestimates the potential and grossly underestimates the obstacles."

Turkmenistan can currently only export its gas to Europe via the Central Asia-Center gas pipeline, which passes through Uzbekistan, Kazakhstan and Russia. Nearly all the gas that Gazprom buys from Turkmenistan is sold to Ukraine via intermediary company RosUkrEnergo, Nesterov said.