Russia's Medvedev in Turkmenistan to talk gas

Turkmenistan, the biggest gas producer in Central Asia, has been emerging from global isolation since President Kurbanguly Berdymukhamedov came to power in late 2006 promising reform.

Under Soviet rule until 1991, Turkmenistan is now at the centre of energy diplomacy as Europe and Russia vie for control over pipeline routes to deliver its gas to global markets.

As Medvedev sat down for talks with the Turkmen leader to persuade him to resist Western temptations and stick to Russian pipelines, a senior Russian energy official said Moscow was determined to grab a larger share of Turkmen gas.

"We plan to increase purchases of gas (in Turkmenistan)," Gazprom chief executive Alexei Miller told reporters.

In an effort to persuade Turkmenistan to stand by old alliances, Russia has agreed to raise the knockout price it used to pay for Turkmen gas to international market levels from 2009 but the two have yet to agree on the pricing details.

"We will discuss financial terms of supplies that will be based on the market price," Miller said.

Medvedev arrived in the Turkmen capital Ashgabat from Azerbaijan on a tour of Caspian energy producers that will also take him to Kazakhstan -- the region's biggest economy and oil producer -- on Sunday.

GAS POLITICS

Central Asia exports a total of 70 billion cubic meters of gas (bcm) a year, about the same as Italy's annual consumption.

The gas is all shipped to Russia via a pipeline controlled by Gazprom, with no routes directly linking it with Europe.

In the 15 years after Turkmenistan became an independent state from the Soviet Union, autocratic President Saparmurat Niyazov kept the country in isolation, while exporting all its natural gas to Russia via a Soviet-era pipeline network.

But since Niyazov's death in 2006, Western officials have worked hard to persuade his successor to consider shipping some gas to Azerbaijan via a pipeline across the Caspian Sea.

Turkmenistan sells about 50 billion cubic meters of gas to Gazprom annually and has agreed with Moscow to build a new Caspian gas pipeline to increase shipments.

It also wants to supply gas via a planned link to China and has hinted it wants to take part in the rival Nabucco pipeline to deliver gas to Europe bypassing Russia -- a project backed by Europe and the United States but criticized by Russia.

Russian energy officials say the planned trans-Caspian pipeline lacks geological justification and could be an environmental risk. Another risk, they say, is the unending argument about the status of the Caspian among coastal states.

"We believe that the Central Asia-Russia pipeline is the most viable project," Miller said, echoing that view.

Berdymukhamedov has shown equal interest in all proposed projects, saying Turkmenistan had enough gas for all routes but analysts have voiced concerns about the country's ability to produce enough to fill all the planned pipelines.