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Russia's Gazprom aims to resume Turkmenistan natural gas imports in Jan 2019

London (Platts)--11 Oct 2018 508 am EDT/908 GMT


Russia's Gazprom plans to resume imports of gas from Turkmenistan at the start of 2019, CEO Alexei Miller said this week, having ceased purchases in January 2016 on poor economics.

Imports suspended in January 2016 on economics

Russia-Turkmen gas relations strained since 2014

Turkmenistan considered source of gas for SGC

Speaking to Turkmen state television during a visit to Ashgabat, Miller said that Gazprom's gas supply contract with Turkmenistan was valid until the end of 2018, and that a new agreement would be reached "very soon."

Relations between Turkmengaz and Gazprom worsened over 2014 and 2015 when the two became embroiled in a dispute over payments and supply volumes.

In January 2016, Gazprom ceased purchases altogether, claiming they were no longer profitable.

Russia was a key market for Turkmen gas over the past decade as Gazprom looked to top up its domestic gas volumes with cheap purchases from the Central Asian country for onward export to Europe.

For Turkmenistan, Russia was a key export market given that its only other export option was to China.

"Turkmenistan is our traditional partner in the energy sphere," Miller said, according to a transcript of the interview posted on the Turkmen government website.

"The intergovernmental agreement between Russia and Turkmenistan on cooperation in the gas sphere is valid until the end of 2018. It was paused for commercial reasons and will be renewed by the end of 2018," Miller said.

"In this regard, we discussed the resumption of the procurement of Turkmen gas by Gazprom, which will start in January 2019," he added.

Miller said that talks on the volumes of gas supplies and other issues would be carried out at the technical level. "We expect this agreement will be achieved very soon," he said.

ARBITRATION DISPUTE

The previous dispute was triggered by a move by Russia at the end of 2014 to cap its imports of gas from Turkmenistan in 2015 at just 4 Bcm, much lower than the 11 Bcm it imported in 2014.

The Turkmenistan energy ministry also accused Gazprom of failing to make any payments for Turkmen gas that year.

The case was moved to the Stockholm arbitration court in June 2015, but Gazprom said the following year the case had been put on hold.

Hearings had been scheduled for July 2017, but Gazprom said the case was "temporarily suspended" until the end of 2018 "with a view to finding a mutually acceptable solution on further cooperation outside the framework of the arbitration."

Turkmenistan produced 62 Bcm of gas in 2017, according to the latest BP Statistical Review of World Energy, with domestic consumption accounting for around a third and exports the remaining two-thirds.

The country has long been seen as a possible source of gas for the Southern Gas Corridor bringing Caspian region gas via Turkey to Europe.

In August, the concept of a trans-Caspian gas pipeline from Turkmenistan to Azerbaijan received a boost when the five nations with borders on the Caspian Sea agreed on the legal terms on how to share access after 20 years of negotiation.

--Stuart Elliott, stuart.elliott@spglobal.com

--Edited by E Shailaja Nair, shailaja.nair@spglobal.com




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