Russ Oil-Gas

01 June, 2009 - Upstream OnLine - Russia's Gazprom has demanded that Turkmenistan cut either the price or the volume of its natural gas, sounding another harsh note in an escalating dispute between the energy giants. The two have been in talks since April over how to resume the flow of gas after it was severed by a gas pipeline explosion, which Turkmenistan says Russia caused. Russia, which no longer needs to buy Turkmen gas due to a sharp drop in global demand, denies any wrongdoing and says it hopes to resolve the situation through talks, according to a Reuters report. "Either we change the price or the volumes," the deputy chief of the Russian gas export monopoly, Valery Golubev, told reporters today according to an Interfax report. A Turkmen officials said last week that if talks failed, it could take Russia to international courts of arbitration. Golubev's statement was the first indication of what is actually on the table between the former Soviet allies. Without mentioning the explosion, he said Europe had slashed its gas imports from Russia, so Turkmenistan must help shoulder the burden of falling demand. "Since Europe is not taking the gas anymore, we said, 'Dear colleagues, there is no market for your gas at such a price'," Golubev said in the Interfax report. "We have suggested to our Turkmen colleagues that they limit the gas supply volumes, just as Gazprom and other Russian producers have had to do," Interfax quoted him as saying. Gazprom, the world's largest gas producer, supplies a quarter of Europe's gas. Part of these supplies are bought from Turkmenistan and other Central Asian states and resold to Europe. But as the global financial crisis hammers European industries, demand for the fuel has fallen, forcing Gazprom to lower its gas output by a quarter in recent months. The demand that is left can be more profitably met using Gazprom's own gas, without buying extra from Turkmenistan, analysts said. Golubev, speaking in the Urals city of Chelyabinsk, reminded Turkmenistan that they have no choice but to ship their most valuable export through Russia as no other pipeline routes exist, at least not for the next five years. "There are no alternatives. Gas to Europe can be supplied from Turkmenistan mainly through the Central Asia-Center gas pipeline system," he said. But for the longer term Turkmenistan is being courted by the European Union to take part in the Nabucco pipeline project, which would take its gas around Russia directly to Europe. Russia, keen to maintain its grip on gas supplies in the region, is ploughing ahead with an alternative to Nabucco, the South Stream pipeline.