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Russian, Turkmen Leaders Fail To Reach New Gas Deal

Turkmen President Gurbanguly Berdymukhammedov (right) raises a glass with Russian President Dmitry Medvedev during their meeting in Turkmenbashi.
TURKMENBASHI (Reuters) -- Russian and Turkmen leaders have failed to set a time frame for the return of Turkmen gas flows to Russia, halted since April after a pipeline blast which left the central Asian nation short of revenues.

The meeting between Russia's president, Dmitry Medvedev, and Turkmen leader Gurbanguly Berdymukhammedov had been expected to generate a breakthrough, mending ties.

Relations were hit after Turkmenistan accused Russia of suspending gas imports because Russia's gas export monopoly, Gazprom, faced reduced demand in Europe and has said it would now seek alternative gas-export routes.

On September 13, Kremlin foreign-policy aide Sergei Prikhodko told reporters Russian and Turkmen gas firms would meet soon to finalize the time frame and pricing.

"Most technical issues, related to the usage of pipelines, have been solved.... In the next weeks, Gazprom will contact Turkmen authorities to agree on the parameters to continue cooperation," Prikhodko said.

When asked whether the date of supply resumption has been discussed, he said : "No such task has been set [ahead of talks]."

Turkmenistan wants a quick resumption since gas, alongside oil and cotton, represents the lion's share of its budget revenues and was worth up to $1 billion a month.

The pipeline blast and the current flow suspension came at a time when Gazprom was facing lower demand in Europe and at home due to the economic crisis.

"As far as the liquidation of this accident is concerned, I would like to say that [Turkmen state firm] Turkmengaz will take a time out with its contacts with Gazprom," Berdymukhammedov told Medvedev on Sunday.

Pipeline blasts are regular on former Soviet Union territory due to the equipment's age, but it rarely takes more than a week to restore flows.

"I don't think we have outstanding questions.... I think it is obvious that pricing will be done under a formula," Berdymukhammedov said.

Bilateral Ties

On September 12, Medvedev and Berdymukhammedov spent a day in a Kazakh Caspian Sea resort of Temberli and the next day attended a truck rally in the Turkmen desert.

In spite of the failure to agree on gas flow resumption, both Medvedev and Berdymukhammedov hugged before and after the talks, with the Russian leader talking up bilateral ties.

"Our trade and economic relations are not just good, but very good," said Medvedev.

Turkmenistan has already taken steps out of Moscow's shadow by offering gas -- to be drawn from the world's fourth-largest reserves -- to buyers in China as well as Europe via the planned EU and U.S.-backed Nabucco pipeline, a key rival to Gazprom.

But with construction yet to begin on pipeline projects to bypass Russia, Turkmenistan needs the support of its Soviet-era master to keep its budget afloat.

The two leaders also presided on September 13 over the signing of a production-sharing deal between Turkmenistan and mid-sized private Russian firm Itera for Block 21 on the Caspian Sea.

Itera's chief, Igor Makarov, said the block could contain 160 million tons of oil and 60 billion cubic meters of gas and his firm would invest up to $1 billion in exploration in tandem with Russian state energy firm Zarubezhneft.