TODAY.AZ / Business

Russian president fends off gas competition

10 May 2007 [11:59] - TODAY.AZ
Vladimir Putin, the Russian president, has embarked on a seven-day trip to Kazakhstan and Turkmenistan armed with a raft of proposals to broaden energy co-operation and beat off competition for central Asian natural gas supplies.

The president flew on Wednesday to Astana, the Kazakh capital, and is due to visit Ashkhabad, the Turkmen capital, and Turkmenbashi and Aktau, two growing oil towns on the Caspian coast.

"Co-operation with central Asia is one of the main priorities in Russia's energy strategy," said Andrei Reus, Russia's deputy minister of industry and energy.

Russia and Kazakhstan are expected to sign a series of agreements during Mr Putin's visit related to natural gas processing, pipelines, coal, electricity and uranium.

In Turkmenistan, his goal will be to cement long-term gas import contracts agreed with Saparmurat Niyazov, the former president who died last year. Mr Niyazov, an erratic dictator, squabbled with Russia about gas prices and promised supplies to rival consumers.

Gurmanguly Berdymukhammedov, Turkmenistan's new president, has pledged to build closer relations with Russia.

Mr Putin, who once described the Soviet Union's collapse as "a geopolitical tragedy," has endeavoured to bolster Russian economic co-operation with central Asia, particularly in the oil and gas sphere.

The policy has been most successful in Kazakhstan, where Russian companies are engaged in key oilfield and pipeline projects.

A new joint venture aiming to process gas from Kazakhstan's giant Karachaganak field at a plant in southern Russia will ensure a significant proportion of Kazakh gas production flows north to Russia. Moscow's strategy is to import growing volumes of central Asian gas to plug an expected shortfall in supplies from its own deposits.

Turkmenistan, the central Asian republic with the biggest gas reserves, has contracted to export 50bn cubic metres of gas to Russia this year and next.

A gas co-operation accord signed in 2003 calls for Turkmen gas exports to Russia to almost double by 2028.

Mr Reus said Russia had offered to help Turkmenistan modernise a pipeline feeding into the central Asian transit system carrying gas north across Uzbekistan and Kazakhstan to Russia, currently the only big gas export route out of the landlocked region.

However, China is competing for central Asian gas and has offered to finance construction of an export pipeline east out of the region. India is also interested in buying Turkmen gas.

The US and Europe have urged Ashkhabad to diversify its export routes by building a pipeline across the Caspian Sea to Azerbaijan for onward transport across the Caucasus to Turkey and Europe. Financial Times

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