International tender for Caspian pipeline forces Gazprom to compete

Mar 30, 2009 02:00 AM

Turkmenistan has launched an international tender for the construction of a pipeline that Gazprom had once considered a done deal. The move highlights increasing friction between Ashgabat and the Kremlin on energy issues.
The tender for the East-West spur, which should link Turkmenistan's vast gas deposits with the Moscow-controlled Prikaspiiski pipeline network, had to date only been associated with the state-owned Russian gas giant. Now, Gazprom will have to place a bid and compete against other international companies.

The 600-km spur is estimated to cost roughly $ 1.5 bn. In 2008, Gazprom pledged to finance the project using its own funds, but Russia's economic woes have hit the gas giant especially hard.
Following the failure of Turkmenistan and Russia to sign a deal earlier in March during an official visit to Moscow by President Gurbanguly Berdymukhamedov, Russian media outlets have speculated that Russian officials are now worried that Ashgabat might try to double-cross the Kremlin. A source in Ashgabat told on March 30 that "the Turkmen leader did not want to give the Kremlin assurances that the infrastructure will be used only to increase exports to Russia through the planned [Prikaspiiski] gas pipeline. And Moscow did not want to sign [away] billions in investment, given the high risk of shifting some or even the entire volume of gas in the Trans-Caspian gas pipeline [outside of] Russia."

According to the tender, companies may compete to design and construct the spur which is being billed as between 800 and 1,000 km in length.
"This project will have significant positive impact on economic and political processes in different regions of the world, in addition to the obvious commercial benefits for participants as well as potential consumers," a Turkmen news agency commented March 27.

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