MOSCOW, November 14 (RIA Novosti commentator Peter Lavelle) - Russian Industry and Energy Minister Viktor Khristenko is in Kiev Monday to discuss Gazprom's natural gas export tariffs to Ukraine. Gazprom's bargaining position going to these negotiations is significant, if not unassailable.
Gazprom announced Friday it had inked an agreement with KazMunaiGaz (Kazakhstan's state-owned oil company) subsidiary Intergas Central Asia for the transport of Russian and Central Asian natural gas via Kazakhstan from 2006-2010 through the CAC (Central Asia - Center) and Bukhara-Urals pipelines. KazMunaiGaz said it would deliver as much as 55 billion cubic meters of gas a year to Russia under the agreement, which is a key bargaining chip in Gazprom's gas delivery talks with Ukraine.
As part of the same agreement, Gazprom made it clear it would not invest $1.5 billion in upgrading pipelines to send Turkmen gas through Ukraine to Europe until Turkmenistan discloses the audit of its reserves.
This requirement will be a key bargaining chip in Gazprom's hands during negotiations with Ukraine. An additional chip Gazprom has is the planned Northern European pipeline project, which bypasses Ukraine. Gazprom intends to raise the natural gas tariff it charges Ukraine to equal European levels (currently Ukraine pays $80 million cubic meters, whereas Gazprom intends to double the tariff to $160 million cubic meters).
The new agreement with Kazakhstan - coupled with the unwillingness to upgrade pipelines for Turkmenistan-to-Ukraine sales - represents potentially strong negotiating leverage vis-a-vis Turkmenistan. The Central Asian republic has pushed for a more favorable pricing regime with Russia and is fully aware of Gazprom's long-term need for external natural gas purchases to meet its long-term export contract commitments.
