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Megadeals of Gasporom
Contract with Turkmenistan will provide reliable "gas bases" for Russia

Three long-term large agreements on gas deals were signed this April. Meanwhile, one of these agreements signed with Turkmensitan may be named as historic. Negotiations on the agreement were carried out within many years and were rather complicated. This agreement was signed during the visit of the Turkmen President Saparmurat Niyazov to Moscow and consists of documents on cooperation in gs sphere, signed by the presidents of the both states and the contract on delivery of gas within 25 years, signed by the Turkmen leader and chairman of board of Gazprom Alexey Miller.

Under the contract, starting from 2004 to 2006 deliveries of Turkmen gas to Gazprom will increase, however, making less than 10 billion cubic meters annually. In 2007, after the terms of the contract with Ukraine are expired these dliveries will make 60-70 billion cubic meters. While in 2009-2028 about 70-80 cubic meters of has will be supplied annually. For 2004-2007 price at 44 USD for 1000 cubic meters is fixed. Later the price will be fixed taking into consideration prices at the world markets for oil and gas. The contract will allow Gazprom to carry out all its domestic and external obligations within the coming 20-30 years keeping up the volumes of gas extraction to the preent level (about 530 billion cubic meters annualy).

According to the data of Gazprom the annual drop of gas production at old gas fields make 20-25 billion cubic meters. For compensating this decline about 20 billion investments will be needed for the period of 2010, of which 5 billlion USD - to explorating fields and 15 billion USD to development of new ones. Under the data of Gazprom exports for 2011-2030 about 24 billion USD will be spent for geological research and purchase of reserve gas.

Thus, sizable import of Turkmen gas will allow Gazprom to remain profitable company, one of the main tax payers of the state and to maintaine and even somewhat strengthen its strategic positions on European markets. It worth mentioning that presently Gazprom is the main exporter of European economic zone, providing 40% of import of these states and 20% of consumption. As for Europe without CIS and Baltic states Gazprom provides about 30% of demands. It must be also stressed that the signed contract will much strengthen Russia's positions in "energy dialogue" with Ukraine.

It is natural that Gazprom will enhance its export activity as soon as it reaches reliable "gas bases". In early April the company prolonged for 2008-2015 the action of the main export contract with Gas de France, foreseeing delivery of 8 billion cubic meters of Russian gas annually. While in the second half of April Gazprom and ENI agreed on increasing gas deliveries to Italy from 19 billion cubib meters in 2002 to 29 billion cubic meters in 2008.

Politburo Monthly, N18, 2003

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By Yakov PAPPE

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