Oil report

Ukraine, Turkmenistan plan more gas supply talks

ASHGABAT, Sept 15 (Reuters) - Turkmenistan and Ukraine plan more talks on natural gas supply after the presidents of the two ex-Soviet countries met on Tuesday, five months after a pipeline blast cut off supplies of Turkmen gas to Russia and beyond.

Russia, which sells Turkmen gas on to Ukraine, stopped buying gas from Central Asia’s largest producer in April following a pipeline explosion that Turkmen officials at the time blamed on Moscow. Supplies have yet to be restored. [ID:nLD46484]

Neither Ukrainian President Viktor Yushchenko nor his Turkmen counterpart, Kurbanguly Berdymukhamedov, gave details about their talks in Ashgabat.

After the meeting, Yushchenko said: “We will continue talks on cooperation in energy, in the gas sector.”

Ukraine has said it is interested in buying gas directly from Turkmenistan and paying Russia only a transit fee, a system used in the 1990s with which Russian state gas export monopoly Gazprom GAZP.MM may not now agree.

Turkmenistan is moving out of Moscow’s shadow by offering gas, drawn from the world’s fourth-largest reserves, to eager buyers in Europe.

It has, in particular, expressed willingness to supply the European Union-backed Nabucco pipeline, a project in which Ukraine wants to take part. The pipeline would reduce the EU’s reliance on imports of gas from or through Russia.

But with construction yet to begin on pipeline projects to bypass Russia, Turkmenistan needs the support of its Soviet-era master more than Moscow needs its gas to serve a European market where demand has dropped significantly this year.

Turkmenistan is in talks with Gazprom to renew supplies to Russia, but the two sides have not yet struck a deal.

Analysts say a prolonged disruption of supplies to Russia would put pressure on Turkmenistan’s economy, which is bleeding up to $1 billion in monthly export revenues due to the row.

Gas exports to Russia, which used to amount to about 50 billion cubic metres a year, were one of the key sources of foreign currency for Turkmenistan. (Reporting by Marat Gurt; Writing by Olzhas Auyezov, editing by Anthony Barker)