Russia has agreed to resume gas imports from Turkmenistan after an eight-month halt over a price dispute. The deal may ruin Western hopes of breaking Russia’s monopoly on gas exports to Europe.

Under a long-term agreement signed on Tuesday during Russian President Dmitry Medvedev’s visit to Turkmenistan, Russia’s Gazprom monopoly agreed to import up to 30 billion cubic metres (bcm) of Turkmen gas. The two countries also agreed to co-operate in building a pipeline.

The sides would not disclose the price of Turkmen gas for Russia, but said it would be based for the first time on the European price formula tied to oil prices. Last year, Russia offered to import gas from Turkmenistan at a fixed European-level price minus transportation costs, but when demand tumbled due to the global crisis Russia stopped buying Turkmen gas after Ashgabat refused to reduce the price.

The newly agreed volumes of Turkmen gas exports to Russia are below the 50 bcm that Gazprom was buying annually before the dispute. But they are still high enough to bury the U.S.-pushed Nabucco pipeline project that would take Central Asian and Caspian gas to Europe bypassing Russia. Earlier this month, Turkmenistan opened a gas pipeline to China with capacity to pump 40 bcm by 2012-2013. Turkmenistan also plans to supply 13 bcm to 20 bcm to Iran via another newly-built pipeline. Interestingly, Russia said it supported the Turkmenistan-Kazakhstan-Uzbekistan-China gas pipeline pointing out that the Turkmen section of the pipeline had been built by a Russian company.

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