MASSIVE UKRAINIAN IMPORT OF TURKMEN GAS SET TO RESUME.

Meeting yesterday in Ashgabat, Presidents Leonid Kuchma of Ukraine and Saparmurat Niazov of Turkmenistan agreed on the immediate resumption of Turkmen gas supplies to Ukraine after an interruption of almost two years. The agreement envisages the delivery of 20 billion cubic meters of gas in 1999 at a cost of US$720 million. The Naftohaz Ukrainy company is the authorized trader for this transaction. Ukraine will pay 60 percent of the cost in goods and services and 40 percent in hard currency. The ratio, clearly favorable to Ukraine, has been made possible by Turkmenistan’s almost desperate need to resume gas exports through the Russian pipeline network to Europe. Turkmenistan has at its disposal–aside from the Russian route–only one pipeline of modest capacity, which runs to Iran.

Russia’s Gazprom company, in March 1997, blocked Turkmen gas exports through Russian pipelines by demanding exorbitant transit fees. The measure dealt Turkmenistan a heavy economic blow while preserving Gazprom’s virtual monopoly on the Ukrainian market. It also left Turkmenistan with some US$600 million worth of Ukrainian arrears for past deliveries of gas.

The implementation of the Kuchma-Niazov agreement depends on Russian consent to transiting the gas. Kyiv and Ashgabat hope to come to terms with Moscow before December 31 on transit fees and forms of payment. One proposal would allow Russia’s Stavropol and Krasnodar territories to retain for their own needs a part of the Turkmen gas in transit to Ukraine (Dow Jones Newswires, Itar-Tass, Eastern Economist Daily (Kyiv), December 23-24).

FINANCIAL CRISIS IS STATED CAUSE OF KYRGYZ GOVERNMENT’S FALL.