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    TURKMENISTAN THREATENS TO CUT OFF NATURAL GAS SUPPLIES TO RUSSIA AND UKRAINE

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    MOSCOW, December 28 (RIA Novosti) - The Turkmenian government issued an ultimatum yesterday to Russia's Gazprom and to Ukraine's Naftogaz Ukrainy. Unless they come to terms on the price of natural gas by Thursday, the ultimatum said, in 2005 Turkmenistan will stop supplies to Russia and Ukraine. Gazprom is not going to make concessions and has already threatened to file a suit in an international court, Vedomosti reports.

    Although long-term contracts have been signed with Russia and Ukraine, Turkmenian officials announced at the start of December that they intended to increase the price of natural gas for Russia and Ukraine to $60 per 1,000 cu m from 2005 (at present Gazprom and Naftogaz Ukrainy pay $44 per 1,000 cu m) and to end barter trade completely (half of the gas is paid for with money and the rest with metal goods and gas equipment).

    "We have a long-term contract with Turkmenistan, in which the level of natural gas supplies, the payment formula and the price are fixed until 2006," said Alexander Ryazanov, deputy chairman of the Gazprom board of directors. "We do not understand how the Turkmen side can terminate this contract unilaterally. This will mean violating an international contract. And if Turkmenistan stops natural gas supplies to Russia, we have the right to appeal to an international court."

    As for Ukraine, Mr. Ryazanov went on, unless it comes to terms with Turkmenistan, it will have to look for a substitute for Turkmenian gas. But he is confident that Gazprom will be able to find gas from other sources for Ukraine. He did not rule out that independent Russian producers could supply the country.

    Analysts doubt that Turkmenistan will follow its threat through. Gas exports are the main source of hard currency for the country. However, talks on a price formula and supplies will be most likely held, and the price of Turkmenian gas will possibly be revised.

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