Turkmenistan, China to sign gas supply deal
(AP)
Updated: 2005-11-24 10:25

ASHGABAT, Turkmenistan - Central Asia's Turkmenistan will sign a major agreement next year to sell natural gas to China and jointly develop Turkmen gas fields, President Saparmurat Niyazov said Wednesday.

China is increasingly looking abroad to secure reliable oil and gas supplies for its booming economy. Turkmenistan, a largely desert nation, has huge natural gas reserves and is the second-largest gas producer in the former Soviet Union after Russia.

Niyazov said the deal, expected to be signed during his visit to China early next year, would involve building a gas pipeline to China from eastern Turkmenistan, where the fields planned for joint extraction are located.

The pipeline will be able to carry 30 billion cubic meters (1 trillion cubic feet) of natural gas a year, Niyazov told a meeting of transport officials from former Soviet republics in the capital Ashgabat.

The financial terms of the agreement were not disclosed.

In July, Turkmenistan and China signed an agreement on oil and gas cooperation and China extended a $24 million low-interest loan to Turkmenistan for the development of its oil and gas industry.

Wednesday's announcement comes days after Niyazov warned Russia and Ukraine that Turkmenistan can do without their markets if they do not agree to pay more for gas supplies. The country, citing increased production costs and higher costs of gas extraction equipment, is seeking to boost its prices for natural gas exports by about 35 percent.

Ukraine relies on Turkmenistan for about 45 percent of its natural gas needs, and was planning to buy about 39 billion cubic meters in 2006. Russia was expected to buy about 7 billion cubic meters and Iran 8 billion.