Publication: Monitor Volume: 5 Issue: 64

Effective today, Ukraine is discontinuing imports of natural gas from Turkmenistan because it can no longer afford to pay for them. Prime Minister Valery Pustovoytenko announced the decision during a March 30 cabinet meeting. A Ukrainian-Turkmen agreement, signed in December 1998 in Tashkent by Presidents Leonid Kuchma and Saparmurat Niazov, had envisaged deliveries of 20 billion cubic meters at a cost of US $ 700 million for the calendar year 1999. Ukraine was to pay 60 percent of the cost in the form of goods and services and only 40 percent in cash. Kyiv has, however, run up debts of slightly over US$100 million since January 1, when the deliveries began.

Kyiv’s reluctant decision hits cash-hungry Turkmenistan hard. The country currently lacks any viable export outlet, with the exception of a small-capacity pipeline into Iran. Ashgabat’s need to export its gas is so pressing, that Niazov had been forced to accede to a quasi-extortionate deal with Russia’s Gazprom for the transit of Turkmen gas to Ukraine. Turkmenistan sold the gas at US$36 per 1,000 cubic meters to the Russian intermediary, who then resold it to Ukraine at a price between US$68 and US$72 per 1,000 cubic meters. It will be another three years at least before the trans-Caspian export pipeline, planned by the American consortium PSG, will rescue Turkmenistan from its predicament (Eastern Economist Daily (Kyiv), UNIAN, AP, March 31).

[Note: The Monitor will not be published on Friday, April 2, 1999. Publication will resume on Monday, April 5, 1999.]

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