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. Last Updated: 07/27/2016

Putin Nears Turkmen Gas Deal

President Vladimir Putin took an important step Tuesday toward winning over a key ally in gas supplies but will have to visit Turkmenistan next month if he hopes to secure a written agreement.

Turkmenistan's new president, Gurbanguly Berdymukhammedov, promised Putin during Kremlin talks that he would work with Russia "in all areas of cooperation, first and foremost in the economic sphere [and] the distribution of Turkmen gas."

He and Putin verbally agreed that their countries would honor a 25-year gas deal signed in 2003 by Saparmurat Niyazov, the Turkmen president who died in December, a communique released after their meeting said.

Turkmenistan committed most of its gas exports to Gazprom under the deal, but Russia wants a signed pledge that Berdymukhammedov will honor the old contract.

No agreements appeared to have been signed during the two-day visit, which came at Putin's invitation and ended Tuesday.

Any deals will most likely be reached during a visit by Putin to Ashgabat around May 13, said Maria Kolodina, a spokeswoman for the Turkmen Embassy in Moscow.

"The parties exchanged opinions and synchronized their positions this time," she said.

A Russian-Turkmen committee co-chaired by Deputy Prime Minister Sergei Naryshkin will probably meet in June, Berdymukhammedov said in the Kremlin.

Sounding an upbeat note, he told Putin at the start of talks: "Yesterday we discussed a lot of options, and you made many good proposals. I think we'll work with those proposals in the future." Berdymukhammedov held informal talks late Monday in Putin's residence outside Moscow.

The change of leadership in Turkmenistan has revived a push by the United States and the European Union to persuade the Central Asian country to send its gas via a proposed pipeline that would go under the Caspian Sea and bypass Russia.

Although Berdymukhammedov endorsed the current export system in February, analysts said Russia had reason to worry that he might pull out.

"I believe such danger exists," Alexander Marchenko, an associate with LeBoeuf, Lamb, Greene & MacRae, who worked on oil and gas deals during a five-year stint in Turkmenistan. "Legally, it wouldn't be completely correct, but psychologically it's quite acceptable."

Steven Dashevsky, an oil and gas analyst with Aton, said Russia had to start from scratch to win pledges of future cooperation "in writing and at the personal communication level" from the new president.

Still, he said, it is extremely unlikely that Turkmenistan would chose to bypass Russia. "Turkmenistan understands that it's better to cooperate with Russia, but as a smart player it's seeking to play its cards right," he said.

Putin praised Berdymukhammedov at the start of Tuesday's talks and reminded him of the "decades of common life in a common state."

At an oval table next to Putin sat his foreign aide, Sergei Prikhodko; Industry and Energy Minister Viktor Khristenko; Gazprom chief Alexei Miller; TNK-BP executive director German Khan; and Viktor Lorenz, head of Stroitransgas, Gazprom's main pipeline builder.

No deals were announced, and a source close to Gazprom said he doubted any deals had been signed. A TNK-BP spokesman declined comment.

Under pricing terms fixed until 2010, Gazprom pays $100 per cubic meter of Turkmen gas. The company then sells it to European clients at a rate 2 1/2 times more. "Russia wants to monopolize its position as the sole gas importer from Turkmenistan and does not want to allow new pipelines to be constructed around its territory," Deutsche-UFG said in a research note Thursday.

More plans are in the pipeline. Companies such as LUKoil, Zarubeshneft, Itera, Soyuzneftegaz, Stroitransgas and RusAl are keen to carry out "promising projects" in Turkmenistan, the Kremlin said in a statement.

Grigory Volchek, a spokesman for LUKoil Overseas, declined to comment on the Turkmen president's visit, saying the company does not comment on politics. But he said LUKoil Overseas is considering oil and gas development in Turkmenistan.

Staff Writer Anatoly Medetsky contributed to this report.