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Kazakhstan Commits To Russian-Led Europe Gas Link

Kazakh President Nursultan Nazarbaev

Kazakh President Nursultan Nazarbaev

ALMATY (Reuters) -- Kazakhstan has approved its participation in a Moscow-led gas pipeline, which could divert potential supplies away from Europe's Nabucco project, days after refusing to commit to the EU-backed plan to cut reliance on Russia.

President Nursultan Nazarbaev signed Kazakhstan's agreement with Russia and Turkmenistan into law on May 13, according to the presidential website

Diplomats who attended a summit in Prague last week said Almaty, Turkmenistan, and Uzbekistan had refused to sign a final declaration to speed up work on the European Union-backed Nabucco project to bring Caspian gas to Europe.

Russia agreed with Central Asian producers in 2007 to carry more of their gas to Russia by increasing the capacity of the Central Asia-Center pipeline system, which would allow Moscow to keep regional gas flows under its control.

But talks have stalled and analysts have said Central Asian states could opt to work more closely with European plans to import gas via the Trans-Caspian Gas Pipeline under the inland sea, rather than sending it around the northern coast to Russia.

The Russian pipeline plan is expected to transport up to an extra 10 billion cubic meters of Turkmen gas a year and the same volume of additional Kazakh supplies, according to the original deal.

Officials say it would come on stream by March 2010, a year before construction work on Nabucco is scheduled to start, but its cost and precise construction plan remain unclear.

Russia's Gazprom said last month it may double the capacity of the pipeline in which Uzbekistan is also due to take part.

Gazprom currently buys about 50 bcm of gas a year from Turkmenistan, about 15 bcm from Uzbekistan, and less than 10 bcm from Kazakhstan using a Soviet-era pipeline.

All countries in the region plan to boost output in the future but the West hopes that these additional volumes would be exported through new routes bypassing Russia.

A source close to the Nabucco project told Reuters the three countries wanted guarantees and tangible incentives to supply the pipeline.

Turkmenistan, the region's biggest gas exporter, which also plans to begin shipments to China through a new link later this year, has said it could fill all the planned pipelines.