Gazprom faces fines threat over gas blast

By Isabel Gorst in Moscow

A gas dispute between Turkmenistan and Russia escalated this week as the central Asian country threatened to claim damages from Gazprom for causing an explosion on a pipeline that has halted its lucrative gas exports to Russia.

The accident, exposing the extent of Turkmenistan’s dependence on Russian gas export routes, could help promote Europe’s campaign to import Turkmen gas through a planned pipeline across the Caspian Sea, bypassing Russia.

It also highlights Turkmenistan’s vulnerability to the global economic crisis, which has reduced Russian gas demand.

Turkmenistan accused Gazprom of triggering the blast by unexpectedly reducing its intake of gas from the main export pipeline linking central Asia with Russia.

Gurbanguly Berdymukhamedov, the president of Turkmenistan, told a government meeting on Monday he would order an international investigation of the accident unless Gazprom accepted the blame.

“If Gazprom is guilty, let they take upon themselves all losses and expenses inflicted on our country by the accident,” he said.

Gazprom refused on Tuesday to comment about the threat of fines, but said Turkmenistan was responsible for repairing pipelines on its own territory.

Foreign governments have courted Turkmenistan for gas supplies since Mr Berdymukhamedov became president in 2007 and pledged to open up the country to the outside world.

Mr Berdymukhamedov last year sanctioned the construction by a Chinese oil company of a pipeline to China that will end Russia’s stranglehold over Turkmen gas exports from 2010.

He has also held frequent talks with European backers of the the planned Nabucco project to transport Caspian and central Asian gas west across the south Caucasus and Turkey, reducing Europe’s reliance on Russian gas.

Gazprom agreed last year to pay central Asian producers European prices for gas in an attempt to block competition for supplies it needed to compensate for declining output at its Siberian fields.

But the urgency of the race for central Asian gas has evaporated as the economic contraction in Russia depresses energy demand, forcing Gazprom to cut production.

Europe is also consuming less gas and has sharply reduced Russian imports while waiting for gas prices, which lag behind world oil prices by six months, to fall.

“The global economic crisis has turned the Eurasian gas business on its head in the past six months,” said Jonathan Stern, the head of gas research at the Oxford Institute of Energy Studies.

“Why on earth would Gazprom buy expensive central Asian gas when it is shutting in its own production?”

Mr Berdymukhamedov visited Moscow last month for talks aimed at finalising plans launched in 2007 to build a new pipeline to carry additional central Asian gas to Russia, but left empty-handed.