Russia fails to sign major energy deal with Turkmenistan

The document to build a gas pipeline in Turkmenistan has not been signed in the Kremlin contrary to expectations. Gazprom does not have the funds for the project, while Turkmenistan plans to build the pipeline bypassing Russia, The Vedomosti newspaper wrote.

Photo: Russia fails to sign major energy deal with Turkmenistan

Russia fails to sign major energy deal with Turkmenistan

The East-West pipeline inside Turkmenistan is expected to supply natural gas to the Caspian pipeline, which leads to Russia . The construction of the pipeline is expected to begin this year. The document on the energy deal was originally planned to be signed as a result of the talks between the presidents of Russia and Turkmenistan. However, the agreement was postponed. Aleksei Miller, the chairman of Gazprom’s administration, withheld comments. When reporters asked him to explain why the document had not been signed, he quietly said “Let’s go” and went out of the building. Russia ’s Minister for Energy Sergei Shmatko did not give any comments either.

A source close to the Gazprom administration said that the parties had decided to postpone the deal upon their mutual consent. President of Turkmenistan, Gurbanguly Berdymukhamedov, did not wish to sign the deal for political reasons because thee were other gas pipeline projects bypassing Russia : the Trans-Caspian pipeline to Turkey and Nabucco – to Europe. Gazprom does not have spare funds for that because prices on natural gas are expected to decline.

Sergei Prikhodko, an assistant to President Medvedev, said that the document would need to be elaborated further before it could be signed. Russia and Turkmenistan do not have any major differences on the matter, the official added.

The project is evaluated at about $1 billion. The financial question is extremely serious nowadays in connection with the crisis, Prikhodko said. The two presidents will sign the deal during the next meetings. It can happen in summer or at the Economic Forum in St. Petersburg , a source from the Kremlin said. A source close to the Turkmen delegation said that Turkmenistan was generally satisfied with the results of the talks in Moscow.

Aleksei Miller said last summer that Gazprom was planning to build the pipeline at its own expense. The construction will take four years. Experts say that it would be extremely risky to launch a billion-dollar project as long as prices on gas continue to fluctuate.

Russia has been a long-time buyer of Turkmenistan ’s enormous gas reserves. Russia uses some of the nation’s gas to meet the demand of European customers.