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Sunday, 23 May 2010

Russia dominance under threat as UAE makes plan for Caspian gas

The UAE is tapping its $328bn sovereign wealth fund to invest in gas-rich Turkmenistan, seeking fuel for its own use while potentially challenging Russia’s dominance as a supplier to Europe.
“We want to invest and we’ve been conducting negotiations for a long time,” UAE Oil Minister Mohamed al-Hamli said in an interview this month in the Turkmen capital, Ashgabat. “We have a special relationship with Turkmenistan. There is a genuine interest and a genuine determination with both countries to exploit this possibility.”

Access to Turkmen gas reserves, the world’s fourth-largest, would help the UAE curb imports of the fuel as growing demand from power stations outstrips supply. At the same time, the Arab country has a stake in a planned pipeline to Europe, which gets a quarter of its gas from Russia and suffered shortages last year as exporter Gazprom and transit nation Ukraine bickered over prices.

The UAE has money to spend after amassing a $328bn fund from oil sales, according to a valuation by the US Council on Foreign Relations at the end of 2008. Having explored for crude in Turkmenistan for 10 years through Dubai-based Dragon Oil, it’s now seeking to tap Turkmen gas as the Central Asian country opens up to more foreign investment.