Energy Question Takes Rus President To The East

Gazprom CEO Alexei Miller held talks with Turkmen President Gurbanguly Berdymukhammedov in Ashgabat on Tuesday, focusing attention firmly on energy ties ahead of President Dmitry Medvedev's trip to the region later this week.

Medvedev's whistle-stop visit, which starts Thursday and takes in Azerbaijan and Turkmenistan, is his third foreign outing since taking office in May and already his second trip to the energy-rich former soviet states on the Caspian Sea.

Coming just over a month after he visited Kazakhstan, the trip to Baku and Ashgabat underlines Russia's determination to maintain its grip on resources flowing out of the region.

In a much-heralded coup for Russia last December, then-President Vladimir Putin signed a deal with his Turkmen and Kazakh counterparts to upgrade a gas pipeline running through Russia along the northern coast of the Caspian.

The deal was seen as striking a blow to plans supported by the United States and EU that would see gas shipped directly under the Caspian to Azerbaijan, leaving Russia out of the picture amid increased fears of overdependence on Moscow.

Despite skepticism over the feasibility of the schedule for the project, work on the pipeline will begin in the second half of this year and take 18 months to complete, Deputy Energy Minister Anatoly Yanovsky said at the World Petroleum Conference in Madrid on Tuesday, Bloomberg reported.

The proposed network would eventually carry a combined total of 20 billion cubic meters of gas from Kazakhstan and Turkmenistan through Russia.

Medvedev, former Gazprom chairman, could be looking to raise the amount of Turkmen gas the firm buys in the short term to plug any potential shortfalls caused by Gazprom's failure to open new domestic fields. Last year exports to Russia accounted for well over half of Turkmenistan's total production, and Russia sold the vast bulk of the gas to Ukraine.

Medvedev's visit to the region comes at a "crucial moment" in gas relations after Gazprom's March commitment to start paying "European prices" for gas from Central Asia by next year, said Jonathan Stern, Director of Gas Research at the Oxford Institute for Energy Studies.

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