Turkmenistan Griping About Gas Payments.

According to Turkmenistan’s president, Saparmurat Niyazov, Ukraine has paid only USD 8.7 mln of its USD 484 mln debt for Turkmen gas. This debt was due in goods and the implied price for Turkmen gas is USD 44 per 1,000 cm. In addition, Niyazov stated that Turkmenistan is suspending the signing of a 25-year contract with Ukraine for gas supplies that initially was planned for September 2005. Niyazov said he had decided to suspend the contract in order to involve Russia in the negotiations. All Turkmen gas delivered to Ukraine passes through Russia’s territory, and the gas pipeline Central Asia – Center is controlled by Gazprom. Earlier Turkmenistan signed a 25-year gas supply agreement with Russia, according to which the pipeline Cental Asia – Center will be fully loaded with Turkmen gas supplied to Russia starting from 2007. Concorde Capital: We believe Naftogaz?s management is responsible for the accumulation of debt for Turkmen gas, but this issue will be resolved without any major implications, as the two parties should be able to find a compromise on the timing of debt repayments, as they have the past. On the other hand, the necessity to negotiate with Russia to ensure supplies of Turkmen gas is more serious, as we earlier explained in our gas note of September 24, 2005.