Ukraine's Leader Goes To Turkmenistan Seeking Gas

ASHGABAT, Turkmenistan -- Ukrainian President Viktor Yanukovych traveled Monday to energy-rich fellow former Soviet nation Turkmenistan in search of a new source of natural gas supplies as his country's relations with traditional provider Russia continue to sour.

Turkmenistan President Gurbanguli Berdymukhamedov.

Yanukovych said he wanted to resume full cooperation between Ukraine and Turkmenistan in the oil and gas sector, alluding to previously existing gas purchase contracts between the two countries.

Turkmenistan and Ukraine do not share a border, however, which means that any gas deliveries would have to pass through Russia.

Turkmenistan says it has spare gas to sell, and the pipeline that it uses to deliver to Russia has copious unused capacity since state-owned Gazprom sharply reduced its purchases of the Central Asian nation's energy exports in 2009.

Ukraine's eagerness to cut down on Russian gas imports stems from what it deems to be unreasonably high prices.

It now pays about $355 per 1,000 cubic meters of Russian gas, but wants to have that price lowered to $230.

Also, Ukraine wants to reduce the amount of gas it buys from Russian by one-third to 27 billion cubic meters annually.

The current contract requires Ukraine to pay for at least 33 billion cubic meters of gas per year, regardless of the quantity it actually imports.

Ukraine believes that even when transit costs are factored in, Turkmen gas will still prove cheaper than what Russia has to offer.

After the collapse of the Soviet Union, Ukraine became the main buyer of Turkmenistan's gas.

Under a five-year agreement, Ukraine purchased 36 billion cubic meters of gas from Turkmenistan annually until 2006.

After that deal expired, Ukraine had to fall back on Russia for its gas needs, even though Moscow's prices for the fuel were significantly higher.

In his remarks to reporters, Turkmenistan President Gurbanguli Berdymukhamedov avoided mentioning whether he had discussed a possible gas deal with Yanukovych, apparently seeking to minimize tensions between his own government and the Kremlin.

Ties between the Turkmenistan and Russia cooled significantly in 2009 after a gas pipeline explosion in Turkmenistan that the two governments blamed on one another.

Prior to that, Moscow had bought 40 billion cubic meters of Turkmen gas annually. Deliveries resumed several months after the blast, but in much smaller quantities.

That left Turkmenistan's northern gas export route to Russia with an excess annual capacity of around 35 billion cubic meters.

Source: AP