While there was a formal pretext for revising the gas terms supply to Ukraine (Kiev and Ashkhabad renew the contract every year), Russia buys gas in keeping with a long-term contract. In the Russian contract the price of gas ($44 per 1,000 cu m) was fixed for the first three years through 2006.
A Gazprom delegation will be sent to Turkmenistan during the next two years, sources in the republic said. Turkmen President Saparmurat Niyazov will turn 65 on February 19, and the Turkmenneftegaz state corporation would like to commemorate it with a new contract with Gazprom.
But the Russian gas concern may do without Ashkhabad's services. In 2005, Gazprom expects an increase of its own output and may also buy additional amounts of gas from independent Russian producers. In addition, Kazakhstan is ready to increase gas supplies to Russia, and last week Gazprom signed a contract outlining the purchase of gas from Uzbekistan.
Ashkhabad's only trump card is the possibility to compete with Gazprom in Europe, supplying gas there through an alternative gas pipeline, said Dmitry Tsaregorodtsev, an analyst from Rye, Man & Gor Securities. However, it would be practically impossible to persuade private companies to invest in such a project under the present political regime in Turkmenistan, he said. This will in fact signify support for Mr. Niyazov, Mr. Tsaregorodtsev said, and it is unlikely that Europe will agree to that. Ashkhabad does not have enough funds for building an alternative pipeline. Turkmenistan will therefore have to accept Russia's terms, according to Dmitry Mangilev, an analyst from Prospekt Investment company.
