ASHGABAT, Turkmenistan -- The prospects for a U.S.-backed trans-Caspian gas pipeline project receded further Friday after Turkmenistan's president said he would never lower gas export prices, as suggested by the consortium building the link.
His remarks come just days after President Saparmurat Niyazov pledged to sell large amounts of gas every year to Russia, effectively depriving the planned pipeline of its supply source. He has also spoken of a dispute with the consortium.
Niyazov described as "unethical" a consortium proposal that Turkmenistan accept half the agreed price for gas sent to Turkey in the initial period of the $2 billion, 2,000-kilometer link.
"They tell us ... come, take half price for three or four years. Later when the project becomes economically viable, you can ask for full price," Niyazov said on state television. He said he would not sell gas for less than $45 per thousand cubic meters.
Turkmen gas would sell for $78 per thousand cubic meters in Turkey, he added.
A source in the Oil and Gas Ministry said last month that the government was unhappy with the profit-sharing arrangement outlined in the consortium's proposal, but Niyazov said talks with the group would continue.
The consortium unites U.S. firm PSG, consisting of Bechtel Enterprises and General Electric Capital Services, along with Shell.
The project is seen as a key effort by the United States to implement its policy of having multiple export pipelines, preventing over-dependence by the energy-rich Caspian region on a single country for energy transit routes.
Pricing is a key issue for Turkmenistan, whose remoteness means it has few options for getting its gas to cash-paying markets. It has yet to agree on a price for its recent deal with Russia, which is offering $36 per thousand cubic meters.
"I told [President Vladimir] Putin: Take gas for $45 or for $42 ... but he said it was too expensive," Niyazov said. "I said let's calculate: You sell gas to Europe for $85 per thousand cubic meters and you want to buy from us for $36."
He attributed the government's position to "historical factors." The countries last month signed a tentative deal to boost exports of Turkmen gas to Russia to 30 billion cubic meters a year.
But another client, Iran, has been buying Turkmen gas for $42 per thousand cubic meters and Niyazov said there were plans to expand supplies to the Iranian market to 13 bcm per year by 2001 from the 5 bcm planned for this year.
"On June 10, we shall hold talks in Tehran. ... If we reach a decision, we will sign a deal," Niyazov said.
Turkmenistan urgently needs to find outlets for its huge gas reserves as its 4.5 million people earn monthly wages of just $33 in real terms. Niyazov said the consortium's proposal to wait for several more years was unacceptable.
"They say we will be rich in seven or eight years, we will make $28 billion. But I cannot make my people wait so long."
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