The rush by the likes of China, the European Union and the U.S. toward the Caspian region as an alternative supplier of gas to Russia is neither increasing security of supply for these countries nor lowering prices, the chief executive of Russian gas monopoly OAO Gazprom (GAZP.RS) said Tuesday.
"Numerous officials and companies from the European Union, the United States and China have taken numerous diplomatic efforts aimed at obtaining a wider access to resources of this region," in an effort to diversify supplies, Alexei Miller said at a press conference at the European Business Congress here.
However, this isn't having the intended effect of bringing extra supply to Europe or lowering gas prices, he said. "No new gas has appeared in Europe but competition among purchasers in the Caspian region strengthened. This immediately manifested itself in a sudden increase in prices," he said.
Turkmenistan increased the price of the natural gas it sells to Russia last November. The price for 1,000 cubic meters of gas rose then from $100 to $130, and will rise to $150 in the second half of 2008.
Miller stepped back from more pointed remarks about Turkmenistan's assumptions about its resources after comments from a draft speech were published by Dow Jones Newswires.
" Turkmenistan seems to be contracting gas volumes which are not guaranteed by proven reserves or real production capacities...as a result, some customers risk not actually getting the gas they are contracted to receive," Miller was expected to say, according the draft seen by this newswire.
In late May, Turkmenistan's deputy oil and gas minister Bairamgeldy Nedirov said the country's gas production will soar to 250 billion cubic meters annually by 2040, from 72 bcm last year.
The country will export 200 bcm of gas in 2040, compared with 50 bcm last year, the official of the secretive state said, with exports of 125 bcm by 2015 and 140 bcm by 2020.
Russian President Dmitry Medvedev said Friday that he would travel to Turkmenistan at the beginning of July amid a struggle to control its enormous gas reserves, AFP reported.
"We will discuss a range of issues in early July during my official visit to Ashgabat," Medvedev said during a meeting with Turkmen counterpart Gurbanguly Berdymukhamedov on the sidelines of a regional summit in St. Petersburg.
"Russia is Turkmenistan's main strategic partner," Berdymukhamedov said.
Gazprom Deputy Chief Executive Alexander Medvedev also said Tuesday the company believes it would be a mistake for European nations to abandon the pricing of gas index-linked to oil prices.
In a market dependent on imports, free-floating gas prices wouldn't necessarily work out better for Europe than those indexed to oil, he said.