If you’re a fan of irony, sit down, kick your feet up, and get ready: you’re in for a treat. Earlier this month, Turkmenistan called Gazprom out for allegedly not paying for any of its gas imports from the former Soviet country in 2015. This raised eyebrows because it’s normally Gazprom calling out one of its captive customers for non-payment (ahem…Ukraine), which in return would normally provoke an angry response from that customer. But dutiful to its part in this bizarro gas supply standoff, Gazprom is now taking Turkmenistan’s state-owned gas company Türkmengaz to court over a pricing dispute. Reuters reports:
Russian gas company Gazprom said on Friday it had lodged a case against Turkmenistan’s Turkmengaz at the international arbitration court in Stockholm over the price in a supply contract. […]
A spokesman for the Russian company said: “A lawsuit has been filed in Stockholm. The demand – a revision of prices.” The spokesman declined to elaborate.
In recent years Turkmengaz has watched its Russian exports drop off a cliff, falling roughly 75 percent since 2008, and Gazprom has threatened to halve those imports this year to just 4 billion cubic meters (bcm). To compensate, Turkmengaz has turned east towards China, selling some 30bcm now with the hope of expanding those exports to 60bcm over the next five years.
In that sense, Turkmenistan has beaten Russia to the punch. Checked in the West by sanctions and ever-less pliant European customers, Moscow has made Beijing a high-priority target. But though it signed a 30-year deal to send 38bcm China’s way, a second deal has languished as the two sides have so far struggled to iron out the details. Competition for China’s prodigious appetite for natural gas therefore hangs in the background of this latest supply spate between Turkmenistan and Russia.
Putin has never shied away from leveraging Russia’s size and clout when it comes to energy contracts, and we’re now seeing that’s as true when he’s buying gas as when he’s selling it.