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RUSSIA MAKES FINANCIAL GAMBLE TO RETAIN CONTROL OF CENTRAL ASIAN ENERGY EXPORTS

Kazakhstan, along with its Central Asian neighbors Turkmenistan and Uzbekistan, will receive a huge increase in energy-related revenue following a flurry of regional diplomatic activity. Ukraine, meanwhile, stands to lose the most under the new pricing framework for Central Asian natural gas. The most important development over the past week or so was a March 11 announcement by the Russian state-controlled conglomerate Gazprom that, starting in 2009, it would pay European market prices for Central Asian natural gas. Gazprom did not specify a price, but given the current market conditions, Kazakhstan, Turkmenistan and Uzbekistan can expect to receive somewhere in the range of $200-$300 per 1,000 cubic meters (tcm) of gas next year. At present, Gazprom is paying up to 180/tcm for Central Asian gas. A statement issued by Gazprom said the deal was is “based upon the interests of the national economies and considering the international commitments with regard to the energy supply reliability and continuity.” The deal is certain to hit Gazprom’s bottom line. Full Story

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