Turkmenistan signs gas deal

July 17, 2009

, ASHGABAT, July 17 – Turkmenistan has signed a landmark deal granting Caspian Sea gas exploration and extraction rights to a member of the Nabucco pipeline consortium, state media reported Friday.

Turkmenistan signed the contract with German firm RWE, a member of the Nabucco project which is seeking to build a pipeline to transport Central Asian gas to Europe on a route which bypasses Russia.

The two sides signed a memorandum regarding the deal in April, which the freshly-inked contract cements.

"The contract was signed in the seaside city of Turkmenbashi in the presence of the president of Turkmenistan, Gurbanguly Berdymukhamedov," the Neutral Turkmenistan state-run daily reported.

"(RWE) received a license for exploration work on block 23 for a length of six years. Upon detection of hydrocarbons in the block a license for industrial extraction for a period of 25 years will be given to the operator."

Moscow has a virtual monopoly on the export of Turkmen gas through its state-run energy giant Gazprom, but there have been signs of strain recently between the two countries that were both once part of the Soviet Union.

The announcement comes one week after Berdymukhamedov said his country was prepared to pump gas into the proposed Nabucco project — a rival to Russia\’s South Stream project. Nabucco is aimed at breaking the Kremlin\’s monopoly on Caspian energy exports.

The 3,300-kilometre (2,000-mile) pipeline is expected to pump as much as 31 billion cubic metres of gas from the Caspian Sea to Austria via Turkey and the Balkans, bypassing Russia.

Europe, which depends on Russia for a large part of its natural gas imports, has been eager to engage with Turkmenistan over the possibility of purchasing its gas directly.

Turkmenistan, with a population of just five million people, has some of the biggest gas reserves in the world.

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