Russia buys Turkmen gas

Russia's gas monopoly Gazprom on Thursday agreed to buy supplies of gas from Turkmenistan that would normally have gone to Ukraine, tightening the screws on Kiev.
Russia and Ukraine are locked in a gas pricing dispute, with Gazprom threatening to cut its supplies from January 1 -- a step that could hit its huge supplies to Western Europe that run across Ukraine.
In a move that pointedly made things worse for its ex-Soviet neighbour, Gazprom said it had agreed to buy 30 billion cubic metres (BCM) of gas from the Central Asian state of Turkmenistan in 2006, up from the previously planned 10 bcm and 7 bcm in 2005.
In the first quarter alone, Gazprom would buy 15 bcm, which would amount to almost all Turkmen gas exports, it said in a statement.
Turkmenistan has been selling 36-37 bcm to Ukraine annually. Gazprom's increased purchases of Turkmen gas will reduce the volumes available for Ukraine to 14-15 bcm.
This is because production in the Central Asian state is expected to stay flat at 60 bcm next year and the country also has to consume 16 bcm at home.
"This deal gives Gazprom one more trump card in its dispute with Ukraine," said energy analyst Valery Nesterov from Troika Dialog brokerage.
Relations between the two ex-Soviet states have soured since Ukrainian President Viktor Yushchenko took power after defeating a Moscow-backed rival in a peaceful revolution a year ago.
Officials in Kiev say Gazprom is acting at the Kremlin's behest to punish Ukraine for its pro-Western policy shift, though Moscow says the issue is purely over economics.
Ukraine's Energy Minister Ivan Plachkov was in Moscow on Thursday for talks with his Russian counterpart, Viktor Khristenko, in the latest attempt to end the crisis. Ukraine rejects Gazprom's demands for the price of Russian natural gas to be increased five-fold to bring it closer to standard prices in Europe.
Kiev wants prices to be raised gradually in a transitional period and says any failure to reach a compromise will give grounds for international arbitration.
On its deal with Turkmenistan, Gazprom said it had also agreed to increase prices it paid for Turkmen gas to $65 per 1,000 cubic metres from the previous $44 after months of wrangling.
For comparison, Gazprom wants Ukraine to raise its payments for Russian gas to $230 per 1,000 cubic metres from the current $50 or face a supply cut in the middle of the winter. Ukraine has said this month it had also clinched a deal to buy large volumes of Turkmen gas next year, but did not disclose volumes and pricing details.