Speaking at a press conference during a meeting of the International Energy Agency in Paris, Bodman said the pipeline, which would pass through Kazakhstan and along the Caspian coast into Russia towards Europe, would "fly in the face of what is needed, which is diversity of supply." He added, "The Europeans should take due note of this and adjust their response accordingly."

On May 12, the presidents of Russia, Turkmenistan, and Kazakhstan struck a preliminary deal to restore the existing Caspian shore gas pipeline and build a new pipeline along the Caspian Coast which would circumvent Uzbekistan. The nations met at a summit of in the Turkmen Caspian port of Turkmenbashi.

According to Russian President Vladimir Putin, the upgraded and new infrastructure is expected to boost capacity by 20 billion cu m/year by 2012. However, the deal has prompted fears amongst European, US, and Chinese circles of losing control over future potential Central Asian gas supplies to Russia. The agreement also increases Russia"s leverage with the European Union as the EU continues to seek out other suppliers and reduce its reliance on Russian gas following strains in their relationship.

For Russia the deal signifies a major triumph over the rival 8 billion cu m/year Nabucco project, which would bring Central Asian gas across the Caspian to Europe. However, Turkmenistan President Gurbanguly Berdymukhammedov has not ruled out supplying Turkmen gas to Nabucco.

Russia, Turkmenistan, and Kazakhstan hope to sign final agreements by September for their projects and expect work to start in first half 2008. One of the key outstanding commercial issues is whether Turkmenistan can demand more money from Russia for Turkmen gas which Russia imports to meet its European export obligations and sells for a greater amount.

PIN/OGJ.COM