Thursday, September 15, 2011

Ukraine's pipe dream eyes Turkmenistan gas...

Turkmenistan is a gas-rich nation in former Soviet Central Asia. In the 1990s and early 2000s, Ukraine procured Turkmen gas in exchange for low-grade consumer produce. When Turkmenistan demanded hard currency in exchange, the relationship fell apart, with Turkmen gas producers redirecting their flow to buyers in China and Russia’s Gazprom.

This Monday and Tuesday, however, the saga took a new turn when President Viktor Yanukovich discussed matters with his Turkmen counterpart Gurnabguly Berdymuhamedov at meetings in Ashgabat. Sources say the discussion produced an understanding to resume discount gas trade – after 2015, when planned transcontinental pipelines around Russia are expected to go into operation.

Professor Andrei Suzdaltsev of Moscow’s High Economics School sees a Ukrainian design to sidestep Russia in international gas trade:

“The Kiev trial of former Prime Minister Yulia Tymoshenko, on charges of selling out Ukrainian interests in natural gas trade, betrays an underlying Ukrainian policy to force Russia to reduce its gas price for Ukraine. Hence Ukrainian appeals to the West and attempts to find natural gas suppliers in Azerbaijan and fabulously gas-rich Turkmenistan.”

Ukrainian energy analyst Dr Vladimir Omelchenko envisages difficulties in the way:

“At present, the only Turkmenistan-Ukraine gas route is across Russia. Developing alternative transit routes will require time and mammoth investment. Moreover, Russia will not be happy to encounter competition on Ukraine’s and Europe’s gas markets.”

“The sought after alternative routes to emerge after 2015 are the Nabucco pipe for bringing Caspian gas to Europe across Turkey and the White Stream pipe for doing this across Georgia, the Black Sea and Ukraine. Unfortunately, there are great risks involved. First, the Caspian powers are yet to decide who owns what in the resource-rich Caspian Basin. And second, many of them look to China as the most convenient buyer.”

Experts point out that both pipes exist only on paper. Contracts for them are still in the works. Pending progress on the matter, only Russia can serve a reliable transit route....

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