Turkmenian gas at Russian prices

In early 1990s Armenia received gas from Turkmenia and paid to Russia only for transit. However, later on Moscow reviewed the terms and as a result Armenia had to deal with Russian partners – “Gasprom” and “Itera” companies which actually resold Turkmenian gas. So far Turkmenia supplied gas to Russia for 44 US dollars per thousand cubic meter. Armenia bought that gas for 55 US dollars, which means that transportation costs and “Gasprom” profits made up about 20 percents of the Turkmenian tariff. Now, Moscow suggests raising the price for Armenian gas to 110 US dollars. The intension of Moscow to raise the prices could not but tell upon the attitude of Saparmurat Niyazow who supposes that someone makes huge profits out of Turkmenian gas. It looks like the decision of tariffs for the gas supplied by “Gasprom” to Armenia, Georgia, Ukraine and Moldova will be speeded up only after the end of negotiations between Moscow and Ashkhabad. It is quite obvious that the higher Turkmenian tariff is, the higher will be the cost of gas for Armenia.
Ashkhabad proposes to raise the price from 44 USD to 60 USD for 1000 cubic meters. Earlier the parties agreed to finish negotiations by December 10. However, the negotiations have not come to an end yet. In Moscow they are still sure that political instruments will allow persuading the Turkmenian leader to reduce the price for about 10 USD. According to the press release published by the press service of “Gasprom”, the parties have agreed to continue till the end of 2005 the discussions connected with the volumes and prices of Turkmenian gas supplied to Russia.
Turkmenbashi’s appetite seems to be too big for “Gasprom”, but how are the things with the appetite of “Gasprom”? For the management of “Gasprom” the difference between 60 USD, demanded by Niyazov and 110 USD proposed to Armenia seems to be too small for gaining proper profits. For transportation of 1000 cubic meters of gas from Central Asia to South Caucasus “Gasprom” is going to earn more than the exporter. If earlier “Gasprom” was satisfied with a 20 percent extra charge on the Turkmenian tariff, now that extra charge has reached 100 percents. Could the prime cost of transportation grow so much? In such a situation the arguments of the Russian party and references to the state of affairs in the international market look unconvincing. It is fairly obvious that the prices are increased not by the “producer” but by the “second-hand dealer” who enjoys monopoly.
For “Gasprom” it is profitable to make money reselling other’s gas. In 2006 the concern plans to increase the purchase of gas in Turkmenia and Kazakhstan to 26 milliard cubic meters from 19, that is to say for 30 percents. “Speculation” is combined with own production by other gas powers too. Iran, for example, being considered one of the largest exporters of gas in the world, purchases the cheap Turkmenian gas. And if Iran decides to resell Turkmenian gas to a third country, Ashkhabad will not be against. Iran will be glad to “speculate” if it is profitable. Now, we are interested in the following principal question – how much will cost the Turkmenian gas, transported via the Iran – Armenia gas pipeline under construction? Will Tehran ask a 100 percent extra charge for transpiration services like Moscow? However that may be, it is already obvious that competition between Iran and Russia for the small Armenian market can become quite favorable for us.