Turkmen gas price jumps 30%

Gazprom will buy Turkmen gas at U.S.$130 per 1,000 cubic metres from the first half of next year, up 30%. The move will most certainly affect Ukraine.

Russia currently buys more than 40 billion cubic metres of gas per year from Turkmenistan, with the bulk being exported to Ukraine. The current price of $100 was agreed with in September 2006.

Ukraine expenses surging

Experts say Ukraine will have to pay more following the 30% price rise.

“The bulk of the Turkmenistan's gas that is pumped through the Russian territory reaches Ukraine. Ukrainian companies will have to pay additional U.S.$2-3 billion annually compared to what they pay now for the imported gas,” Mikhail Krutikhin, analyst at Rusenergy, said.

Ukraine on the other hand has said it will not pay even higher prices in recent negotiations with Moscow. The country's Economy Minister, Anatoly Kinakh, said a price of $180 or more would have an extremely negative impact on Ukraine.

Not only about price

Russia's agreement to the new terms will mean that even more gas flows its way. Moscow wants to keep its monopoly on supplies of Turkmen gas.

The EU wants Turkmenistan to send its gas via the proposed trans-Caspian pipeline which would connect to the Nabucco route and bypass Russia.

But Ashgabat has been swift to act after renewing its relationship with Russia over gas following last week's summit. Turkmenistan is going to boost the capacity of an existing route and build a new pipeline via Kazakhstan to Russia.

Gurbanguly Berdymukhammedov, Turkmen President, expressed readiness to accelerate the pipeline’s construction.

“We have to start construction during the second half of 2008, but Turkmenistan is ready to start even earlier,” he said.