AP NEWS
Related topics

Ukraine Threatens to Close Gas Pipeline Over Dispute With Turkmenistan

March 4, 1992

MOSCOW (AP) _ Ukraine is threatening to close a natural gas pipeline that passes through its territory and block exports to the West following a price dispute with Turkmenistan, news reports said Wednesday.

The conflict highlights the vacuum left by the collapse of the Soviet Union’s centralized economy, as former republics struggle to form new trading arrangements among themselves and abroad.

Republics such as Turkmenistan, once required to sell their natural resources at cut-rate prices for worthless rubles, now are discovering world prices and new markets. Former customers such as Ukraine are balking at the new economic realities.

Turkmenistan accuses Ukraine of backing away from a Feb. 21 agreement to buy 28 billion cubic meters of gas at 800 rubles ($8.88 at current exchange rates) per 1,000 cubic meters.

That’s 25 times more than the previous rate charged by Turkmenistan, but only a fraction of world prices.

Vitaly Ocheresov, a member of Turkmenistan’s presidential council, said Ukraine demanded Feb. 29 that the new price include the cost of delivering the gas, and said it had stopped food deliveries to Turkmenistan.

Ocheresov told Nezavisimaya Gazeta the cost of pumping 1,000 cubic meters of gas 1,180 miles to Ukraine was 770 rubles - which would leave Turkmenistan only 30 rubles of the 800-ruble price.

″We are not going to sell gas at this ridiculously low price,″ Ocheresov said.

Ukraine Prime Minister Vitold Fokin told Ukrainian TV on Tuesday that the addition of transportation costs would raise Turkmenistan’s proposal to 1,600 rubles ($17.77) for 1,000 cubic meters of gas - or 50 times more than before.

The ITAR-Tass news agency said Turkmenistan has suspended gas deliveries to Ukraine until the issue is resolved.

Fokin, in turn, threatened to shut off the gas pipeline that carries 100 billion cubic meters of gas annually to Europe, including 11 billion cubic meters of Turkmenistan’s gas.

The stakes are high for both sides.

Natural gas is an important source of hard currency earnings for Turkmenistan, which has few other industries.

Ukrainian industry relies heavily on Turkmenistan’s gas, and any interruption in supplies may force some factories to close, Fokin said Wednesday.

Fokin called for new talks among Ukraine, Turkmenistan and the Russian company that transports the fuel.

Most of the pipeline between Turkmenistan and Ukraine travels through Russia. Much of the gas in the pipeline comes from Russia.

Oleg Matveyev, an aide to the director of Russia’s state-owned gas exporting firm, said it would be impossible for Ukraine to shut off only Turkmenistan’s gas at the border.

″I suspect it was no more than a threat,″ Matveyev said.

Turkmenistan’s deputy prime minister, Nazar Suyonov, told the independent Interfax news agency his government was willing to resume negotiations with Ukraine.

But he said Turkmenistan now would probably insist on a price as high as Russia charges - 2,360 rubles ($26.22) per 1,000 cubic meters. He said the average world price is about $85 for that volume.

AP RADIO
Update hourly