October 12, 2008

Caspian pipeline accord signed

It is reported that the governments of Russia, Kazakhstan and Turkmenistan signed an agreement on the construction of the Caspian gas pipeline in Moscow. The agreement was signed by Russian Industry and Energy Minister Mr Viktor Khristenko in addition to his Kazakh and Turkmen colleagues. The signing took place in the Kremlin following talks between Russian President Mr Vladimir Putin and Kazakh President Mr Nursultan Nazarbayev.

The construction of a gas pipeline from the Belek compressor station outside Turkmenbashi in western Turkmenistan to the gas measuring station Alexandrov Gai in Russia's Saratov region requires the overhaul of the existing Okarem-Beineu pipeline from the southern part of Turkmenistan's Caspian coast to the Central Asia Center pipeline as well as the Central Asia Center pipeline itself.

As part of the agreement, Turkmengaz will build a new gas pipeline with capacity of up to 10 billion cubic meters per year to the Karabogaz gas measuring station in Kazakhstan. Turkmenistan has also provided guarantees that Gazprom will receive up to 10 billion cubic meters of gas per year in line with an earlier agreement. The agreement will remain in force until the end of 2028 and can be automatically extended each year after that.

Kazakhstan's gas transportation capacity along this route is to be increased to 20 billion cubic meter of gas per year so that it can transport additional volumes of Turkmen gas as well as 10 billion cubic meter of Kazakh gas.

Russia has pledged to purchase 10 billion cubic meter of gas from both Kazakhstan and Turkmenistan as well as expand the CAC pipeline on its territory to make it possible to handle this amount of gas.

The three countries may agree in the future to increase the volume of gas to be transported along this pipeline in excess of the aforementioned figures.

The Pre Caspian gas pipeline is considered by some observers to be an alternative to the Trans-Caspian gas pipeline from Turkmenistan to Azerbaijan, which can transport Turkmen gas to Europe bypassing Russia although Turkmenistan has said it has enough gas to fill both pipelines. Meanwhile, some experts have said the Trans-Caspian project remains virtual. Problems hindering the construction of the pipeline include the unresolved status of the Caspian Sea and continued disputes between Turkmenistan and Azerbaijan on the ownership of several gas fields.