In August 2003, Gazprom concluded a 25-year gas supply contract with Turkmenistan. Under the original terms of the agreement, Turkmenistan promised to deliver 60 billion to 70 billion cubic meters of gas in 2007, increasing the amount to between 63 bcm and 73 bcm in 2008.
The latest understanding between the two parties, discussed in a meeting between Turkmen President Gurbanguly Berdymukhammedov and Gazprom CEO Alexei Miller on Wednesday, could put third parties hoping for access to Turkmen gas supplies out of the running. Yet despite its assurances of cheap gas supplies, Turkmenistan delivered only 42 bcm of gas to Russia last year, while 50 bcm is planned for this year, at a price of $100 per 1,000 cubic meters, said Valery Nesterov, oil and gas analyst at Troika Dialog.
It is also unlikely that Turkmenistan will be able to deliver 80 bcm of gas to Russia in 2009, as required by the agreement, Nesterov said. Without reform and foreign investment it will be difficult for Turkmenistan to fulfill this obligation, he said.
"There is a serious misunderstanding by some in Europe that Turkmenistan in particular, and the Central Asian region in general, will somehow act as an energy savior for Europe," said Andrew Stroehlein, media director of International Crisis Group, which released a new report on Turkmenistan on Monday. "Such a hope unrealistically overestimates the potential and grossly underestimates the obstacles."
Turkmenistan can currently only export its gas to Europe via the Central Asia-Center gas pipeline, which passes through Uzbekistan, Kazakhstan and Russia. Nearly all the gas that Gazprom buys from Turkmenistan is sold to Ukraine via intermediary company RosUkrEnergo, Nesterov said.
Russia set to strengthen world energy markets
"Efforts of international hydrocarbon producers are not aimed at undermining energy security, and we are determined to join such efforts that would consolidate international energy markets," Putin said during his visit to Jordan.
Putin said Russia, which controls more than 25% of the world's gas reserves, did not initiate the idea of a gas cartel. In late January, Iran proposed establishing "a cooperation organization in the gas sector similar to OPEC." Putin then supported the idea despite skepticism of some Russian officials and lawmakers.
"Who said that we have rejected the idea of a cartel?" the Russian president said Monday at a joint news conference with the emir of Qatar. "I said it was an interesting idea."
"Whether we will establish this cartel or whether we need it is a separate issue," Putin said, adding that natural gas producers should coordinate their actions on the matter.
Putin initially welcomed the idea at an annual news conference with the Russian and foreign media at the beginning of the month, saying that such an organization could coordinate policies in the gas sector to ensure uninterrupted supplies, but added the cartel should not fix prices like the Organization of Petroleum Exporting Countries (OPEC).
OPEC's main aim is to coordinate the oil policies of its member states to protect their interests and ensure stable prices on world oil markets. Russia is the largest oil-producing nation outside the cartel.
Unlike oil, which is traded in a global marketplace, natural gas is currently sold in fragmented markets mostly through futures contracts, and producing countries do not work together to try to influence the markets.
Russian and other natural gas producers will discuss the possible establishment of an alliance between major gas exporters at a conference in Doha in April, the Russian and Qatari leaders said Monday.
"Our experts will attend the conference in Doha in April," Putin said.
The Russian president said gas exporters should not only coordinate their activities, but also develop a system of partner relations with global consumers.
"It is important to develop common approaches, equal conditions for gas producers, and a system of relations with gas consumers," Putin said. "That is why we are interested in developing relations with Qatar in this sphere."
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