Russia to start importing gas from Turkmenistan?

Russia to start importing gas from Turkmenistan?

The head of Russia's giant gas company Alexei Miller said it plans to resume imports from Turkmenistan after a three-year break over a pricing dispute.

In an interview with Turkmenistan's state television channel during a visit to Ashgabat on October 9, the Gazprom chief said that the company expects to start buying gas from the Central Asian country starting January 1.

Miller added that he discussed the prospect of renewed imports with Turkmen officials, including President Gurbanguly Berdymukhamedov, yesterday, but volumes and other details are yet to be worked out, the Associated Press reported.

Russia was the main importer of Turkmenistan's gas before it stopped buying it at the start of 2016 amid a slump in global prices, citing alleged contract violations. Turkmenistan then halted shipments of natural gas to Iran, citing Iran's debt for previous supplies, and was left with China as its sole customer.

A leading analyst of the National Energy Security Fund, a lecturer at the Financial University under the Government of the Russian Federation, Igor Yushkov, speaking to Vestnik Kavkaza, noted that Russia may be interested in buying Turkmen gas only in terms of competition for markets. “Economically, we don’t need Turkmen gas, because we have huge volumes of our own production. After meeting with Putin at the Eastern Economic Forum, Xi Jinping gave instructions to sign a contract for the purchase of gas from Russia via the eastern route as soon as possible, via the Power of Siberia-2, which goes through Altai. That is, this project is resumed and negotiations are intensive," he said.

"China needs supplies via Power of Siberia-2 in order to increase the reliability of gas supply - last winter they had interruptions in the supply of Turkmen gas. In this regard, you can see the logic in the talks between Russia and Turkmenistan that Gazprom will purchase additional volumes of Turkmen gas so that either Turkmenistan reduces the volume of supplies to China or does not increase it," Igor Yushkov stressed.

In this regard, the most likely volume of purchases will be rather small. "Turkmenistan doesn't export a lot of gas - 33.6 billion cubic meters per year, of which 31.7 billion cubic meters per year go to China. It is unclear how much they can give to Russia. It is quite possible that we are talking about about 4-5 billion cubic meters per year," the economist noted.

The Professor of the department of state regulation of the economy of the Institute of Public Administration and Management of RANEPA, Olga Malikova, in turn, drew attention to another problem of purchasing Turkmen gas. "Turkmenistan now is among the countries with the largest proven natural gas reserves. We may have interests related to the transit of Turkmen gas to European countries and, possibly, our own use, but Turkmen gas requires quite complicated processing conditions," she said.

"Of course, there is competition with Turkmenistan in the eastern direction. All Central Asian countries are focused on the supply of natural gas to China. But, if we are talking about the European direction, then Europe’s own natural gas production is declining, and these the volumes will have to be replaced with some supplies. So, we should understand whether it would be appropriate for us to export Turkmen gas to Europe," Olga Malikova concluded.