Russia secures Caspian gas pipeline deal
By Isabel Gorst in Baku
Published: December 21 2007 02:00 | Last updated: December 21 2007 02:00

Russia, Turkmenistan and Kazakhstan finalised a landmark agreement yesterday
to build a pipeline to transport gas to Russia, tightening Moscow’s control
over Central Asian gas exports.
The deal comes at a time of intense competition for the region’s rich energy
resources. Dubbed Pricaspiysky, the new pipeline will skirt the east coast of
the Caspian Sea carrying 20bn cubic metres a year of Turkmen and Kazakh gas
north to Russia’s Saratov region.
The accord, signed in the presence of Vladimir Putin, the Russian president,
and Nursultan Nazarbayev, Kazakhstan’s leader, is a setback for Europe, which
is courting Caspian producers for gas supplies to reduce its dependence on
Russian imports.
Julia Nanay, of PFC Energy, said, "The agreement on this pipeline marks a
strengthening of energy relations between Central Asia and Russia and fulfils
one of Putin’s key policy goals of tying large supplies of gas from Central
Asia into the Russian system."
Gazprom, the state-controlled Russian gas company, needs Central Asian gas to
compensate for a fall in production from its Siberian fields, a decline that
threatens to undermine its $37bn (=82¬25.5bn, £18.4bn) a year European gas
export business.
Mr Putin said the Pricaspiysky pipeline would be "a serious investment by our
countries in strengthening energy security, not just in Eurasia but more
widely, bearing in mind our main consumers in west Europe".
Separately, Russia, Kazakhstan, Turkmenistan and Uzbekistan plan to modernise
and expand a Soviet-era pipeline, currently the only large gas export route
out of landlocked Central Asia.
Viktor Khristenko, the Russian energy minister, said the Pricaspiysky
pipeline would be built by late 2010. Each republic would take responsibility
for financing construction of the pipeline on their territory, he said.
Mr Putin and Mr Nazarbayev earlier spoke by telephone with Gurbanguly
Berdymukhammedov, the Turkmen president, who came into office a year ago after
the death of Sapurmurat Niyazov.
Mr Berdymukhammedov has begun construction of a gas export pipeline to China
that will end Russia’s stranglehold on Turkmenistan’s gas export routes by
the end of 2009.
He has also held frequent talks with western governments about a project to
build a gas pipeline across the Caspian Sea to Azerbaijan to link up with the
planned Nabucco system supplying Caspian gas to Europe. Nabucco is central to
the EU’s strategy to diversify gas imports away from Russia.
Finalisation of the Pricaspiysky project, first announced in May, has been
postponed several times despite intense lobbying by Russian diplomats.
Meanwhile, Turkmenistan has persuaded Gazprom to accept a 30 per cent
increase in gas prices, despite an earlier contract fixing the price at $100
per thousand cubic metres until 2009. The price will rise again to $150 per
thousand cubic metres in the second half of next year.
Analysts said it would be difficult for prospective investors in the
trans-Caspian pipeline to compete with the higher price Gazprom has agreed to
pay Turkmenistan.
The Financial Times Limited 2007