Russia to restart importing Turkmen gas after three years

Russia to restart importing Turkmen gas after three years
The Darvaza gas crater, or "Door to Hell", in central Turkmenistan. The crater was caused by the collapse of a natural gas field into an underground cavern. Soviet geologists in 1971 set it on fire to prevent the spread of methane gas. It has burned continuously ever since.
By bne IntelliNews October 10, 2018

Turkmenistan has received some badly needed positive news from Russia’s Gazprom in the fight against its financial crisis, with the state giant announcing that it will resume importing Turkmen natural gas from the start of 2019.

Gazprom CEO Aleksey Miller made the commitment in an interview with Turkmenistan’s state-run television channel on October 8.

Until it was displaced by China at the beginning of the decade, Russia was the number one importer of Turkmen gas, but at the beginning of 2016 it stopped taking shipments altogether after price disputes and a mysterious pipeline explosion in 2009. However, both Moscow and Ashgabat in August signed the Caspian Sea convention, which included preliminary plans for Russia to restart imports of gas from Turkmenistan, which sits on the world’s fourth largest gas reserves. Relatively cheap imports of Turkmen gas used to help Russia boost its own gas exports to Europe.

"We are talking about the resumption of purchases of Turkmen gas by Gazprom in the very near future—from January 1, 2019," Miller said. He added that the details of the new deal still need to be finalised. He gave no indication of the scale of imports that could eventualise.

Left with only China
The Russian decision to scrap its gas import relationship with Turkmenistan nearly three years ago left the Turkmen with only China as a major customer for their gas. The second major export destination for Turkmen gas is northern Iran, but Ashgabat and Tehran are engaged in a row over historical gas debts that the Iranians allegedly owe.

From 2010 to 2015, Gazprom imported around 10bn cubic metres (cm) of Turkmen gas per year, but prior to the scrapping of all the gas imports that figure was down to around 4bn cm.

Turkmenistan is greatly dependent on gas export revenues to sustain its economy. Reliable information on the extent of the financial turmoil afflicting the remote and tightly controlled nation of less than six million people is difficult to source, but in June this year there were reports of passport-based bread rationing while in late September the remnants of Turkmenistan's three-decades-old free and discounted gas, electricity and water programme for its inhabitants were eliminated by the signing of an austerity decree by Turkmen President Gurbanguly Berdymukhammedov.

Turkmenistan exports gas to China through the Central Asia-China pipeline. Those gas deliveries are currently thought to be running at between 30bn cm and 40bn cm per year, and Ashgabat had plans to boost the flow to 65bn cm by 2021, until the construction of the Line-D section of the Central Asia-China pipeline came to a halt. It is believed that a large part of the revenues Turkmenistan earns on gas sales to China are used to pay off debt on the Beijing-financed pipeline link, which also crosses Uzbekistan and Kazakhstan.

Turkmenistan, meanwhile, is constructing the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. The project envisages supplying gas from one of the world's largest fields, Galkynysh, with estimated reserves of 13.1tn cm, to Pakistan and India via Afghanistan. Whether the Taliban will stick to their pledge to protect the project (in return, of course, for a share of the spoils) is open to question.

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