Turkmen gas price formula to be completed by mid 2006
The price formula for gas delivered from Turkmenistan to Russia should be completed by the middle of this year, Russia’s industry and energy minister Viktor Khristenko said.
Responding to reports that Turkmen president Saparmurat Niyazov wanted to raise the price of gas to Russia to $100/thousand(K) m3 Khristenko added: “Everything changes in life and even the fixed price formula for RosUkrEnergo RUE [the operator for the gas agreement between Russia, Turkmenistan and Ukraine] represents a floating price that could change, depending on the market situation,” he said in comments reported by Russian newswire Ria Novosti.
Khristenko said it was necessary to work out a formula before mid-2006 for gas delivered from Turkmenistan under a long-term contract signed between Russia and the Central Asian republic. Under an additional agreement to the 25-year contract signed on 10th April 2003 between Gazexport — the export arm of Gazprom — and Turkmenneftegaz, Turkmen gas deliveries to Russia are to increase to 30 billion cubic metres (Gm3) in 2006. Of this, 15 Gm3 has been contracted for the first quarter at the price of $65/Km3.
The annual volumes are unrealistic given that Ukraine is also contracted to take 35-40 Gm3 Turkmen gas this year, and this is likely also to form part of the negotiations. Turkmenistan also supplies gas to Ukraine via Russia and should the Turkmens increase the price of their gas to US $100/Km3 this will have much bigger implications for Ukraine than the heavily publicized increase in Russian prices to Ukraine, which rose at the start of this year to a nominal $230/Km3 at the Russian/Ukrainian border from $50/Km3.
That is because as far as gas imports are concerned, Ukraine will from this year be mainly reliant on imports from Turkmenistan (together with some from Kazakhstan and Uzbekistan) with Russian gas expected to play only a minor part – or no part at all - in the Ukrainian gas balance. According to the present agreement with RUE/Ukraine is paying $95/Km3 at the Russian/Ukrainian border.
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