Turkmenistan raised the stakes in its gas pricing dispute with Russia yesterday by threatening to cut supplies altogether if Gazprom did not raise the purchase price by more than a half.

The price Turkmenistan charges Gazprom is of vital importance to Ukraine, which buys most of its supplies in Central Asia from the Russian state monopoly.

The Turkmen foreign ministry said in a statement that it now wanted Gazprom whose CEO Alexei Miller was in Ashgabat earlier this week to pay US$100 per 1,000 cubic metres of natural gas instead of the current US$65.

"If such a contract is not signed with Gazprom over the next month and a half ... then Turkmenistan would stop gas supplies," the statement said. Gazprom was not available for comment.

A source close to Miller's negotiations with Turkmen President Saparmurat Niyazov said Miller had asked for a break in talks for consultations with top Russian officials.

It was unclear when talks with Niyazov were to resume.

Turkmenistan's threats echoed a move by Gazprom at the beginning of the year when the world's No 1 gas company briefly cut gas exports to Ukraine the main transit route for Russian supplies to Europe due to a row between the two.

Under Turkmenistan's current agreement with Russia, Central Asia's top natural gas producer was due to export 30 billion cubic metres of gas at a price of US$65 per 1,000 cubic metres in the first half of 2006.

"The Turkmen side asked to set the price of US$100 per 1,000 cubic metres from the second half of the 2006, which is a normal price. But the Russian side asked for US$65," the foreign ministry said.

"Turkmenistan categorically rejected this request. That is why the contract (for the second half) was not signed."

Turkmenistan currently produces about 60 billion cubic metres of natural gas a year and exports two-thirds of that, mainly to Gazprom. A small part of its exports goes to neighbouring Iran.

Turkmenistan and Gazprom have discussed raising annual shipments to 50 billion cubic metres over the next three years, and Gazprom seeks to eventually raise Turkmen purchases to 80 billion cubic metres.

Source: China Daily