Wednesday,
23 August 2017
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Gazprom to buy Central Asian gas at `European prices`

It could result in markedly higher prices for European consumers

Former Soviet Central Asian countries will begin selling natural gas at European levels next year, Russia`s state-controlled monopoly said Tuesday, which could result in markedly higher prices for European consumers, according to AP.

The decision "is based on the interests of the national economies and takes into account international obligations to ensure reliable and uninterrupted energy supplies," said a statement released after a meeting between OAO Gazprom head Alexei Miller and the heads of the national gas companies of Kazakhstan, Uzbekistan and Turkmenistan.

The brief statement did not specify how the "European prices" would be calculated. But it appeared to foretell a significant hike for end users because Gazprom currently buys gas from these countries at comparatively low prices before reselling it to Europe.

Gazprom estimates that its average price for European contracts this year will be about US$354 (?230) per 1,000 cubic meters, whereas it currently buys Turkmen gas for US$130 (?85) per thousand cubic meters, according to the state news agency RIA-Novosti.

The Central Asian gas consumed in Western Europe travels through pipelines controlled by Gazprom.

The announcement also appeared to indicate new difficulties for Russia`s neighbor Ukraine, which has been sparring with Russia for months over gas debts and contract terms.

Most of Ukraine`s gas imports come from Central Asia, for which it pays US$179.5 (?117) per thousand cubic meters, buying the gas through an intermediary company half-owned by Gazprom. Gazprom has sought to charge Ukraine US$315 (?205.35) for gas that originates is Russia.

Gazprom briefly cut shipments to Ukraine by 50 percent last week to force resolution of the dispute. It restored the shipments after an announcement that the Russian and Ukrainian presidents had reached an agreement.

The agreement, whose details were not revealed, came amid concern in Western Europe that the dispute would affect those countries` supplies. Much of the gas Western Europe buys from Gazprom comes in pipelines that cross Ukraine.

Ukrainian officials were expected to come to Moscow Tuesday to discuss the issue, but the meeting was postponed until at least Wednesday.

By agreeing to pay European prices for Central Asian gas, Gazprom also appeared to undercut pressure by the United States and Western Europe for the Asian countries to export some of their gas by routes bypassing Russia.

AP

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