The deal would increase the ex-Soviet republic's dependence on Russia'sestablished pipeline network and with it Moscow's political influence inAshgabat. This is something both Washington and Ankara have sought toavoid.

"It is well known now in the energy world that Russia is holding thecontrols in the Central Asian gas game," said Necdet Pamir, chief energyanalyst at Ankara-based Centre for Euroasian Strategic Studies (ASAM).

"Putin's move, which came not suddenly but in an obvious manner, hasseverely hurt the TCP (Transcaspian Pipeline) project."

Turkey and the United States have been trying hard to realise the TCPproject, which envisages a 2,000 km (1,250-mile) pipeline to carry aneventual 30 billion cubic metres (bcm) gas to Turkey and later to Europe.

But the $2-billion project, backed by the United States, was thrown inserious doubt when Putin and his Turkmen counterpart Saparmurat Niyazovannounced last week that Russia would, given agreement on pricing, beginreceiving 20 bcm a year of Turkmen gas from this year.

Supplies would reach 50 bcm a year under the 30-year deal.

The former Soviet republic of Turkmenistan, which sits on the fourth largestgas reserves in the world, needs urgent cash to improve its ailing economyand the Russian deal is seen as the quickest means for that end.

Two major blows to TCP project
"Turkmens will not have sufficient gas to supply Russia and Iran, with whichthey have struck agreements, and later Turkey under the TCP project," Pamirsaid.

Turkmenistan, which produced 22.8 bcm in 1999 and plans 46 bcm this year,has also promised to supply Iran 13 bcm a year. Under TCP, which should comeon stream between 2002 and 2004, Turkey would eventually get 16 bcm.

Another 14 bcm would be sold to Europe.
"Another blow to the TCP project is that its consortium has failed to fulfilits pledges in time and the Turkmen government is now reluctant to extendtheir work mandate," Pamir said.

Niyazov said last week the TCP project could be delayed until disputes withPSG, the consortium made up of US companies Bechtel and General ElectricCapital Services and Royal Dutch Shell, were resolved.

PSG said on Monday it was slowing work by cutting spending and staff devotedto the project.

But Turkey's energy minister Cumhur Ersumer said the TCP deal was goingahead despite some "difficulties" and he believed Turkey will begin gaspurchases from Turkmenistan.

"The consortium needs to get a mandate, which expired in February. They willovercome the problems and the project will continue," he told parliament onTuesday.

Gokhan Yardim, head of Turkey's state pipeline concern Botas, said on Mondaythe Russian-Turkmen deal lacked a firm agreement to specify financing, themeans of rehabilitating existing pipelines and pricing.

Failures of TCP parties
Pamir said PSG's obligations included finding suitable partners to theconsortium and developing a finance model, which would ensure smoothprogress in the TCP project.

"But it has failed to meet those two criteria," he said."PSG has got Shellas partner, but Shell has interests in Russia and Iran, with which Turkmenshave gas sale deals already. So Shell would not contradict itself byjeopardising its previous gas deals with Russia and Iran."

PSG, which would carry put the construction of the pipeline up to theTurkish border via Azerbaijan and Georgia, has also failed to draw up afinance plan for the project despite some verbal support from US financiers.PSG's dispute with the Turkmen government is believed to focus on splittingprofits from the pipeline. Turkmenistan opposes a PSG demand for a largershare in the profits.

Turkey's involvement in two other gas supply projects - Blue Stream whichwould pipe Russian gas through the Black Sea and an Iranian project - havealso hampered the progress of the TCP bid, another energy analyst said."The government has dedicated more time and effort to the Iranian and BlueStream projects and that weakened support to the TCP deal," said the analystfrom a government institute.