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Annexed by Russia between 1865 and 1885, Turkmenistan became a Soviet republic in 1925. It achieved its independence upon the dissolution of the USSR in 1991. President NIYAZOV retains absolute control over the country and opposition is not tolerated. Extensive hydrocarbon/natural gas reserves could prove a boon to this underdeveloped country if extraction and delivery projects can be worked out.
Update No: 269 - (29/05/03)
Russian lock on Turkmen gas
At a time when nobody was looking at the Caspian Sea and all eyes were on the Gulf, the Russians made a mega-deal with Turkmenistan that gives them a lock effectively on that country's main asset by far, the third largest gas reserves in the world (after Russia and Iran).
Actually, this could be contested, Iraq itself, Saudi Arabia, Algeria and Qatar all have huge reserves. It is questionable who exactly is third of fourth or fifth. But one thing is for sure; Russia has easily the largest gas resources. So why does it need Turkmenistan's too; and why does Askhabad let itself be subjected to a new colonial status for its main exporter?
To take the last question first, president Saparmurat of Turkmenistan is a bungler of no mean proportions. He has ruined chances of doing a deal with Westerners, giving his country an alternative route to Russia. The Western majors are totally fed up with him, the megalomaniac delusions of the absurd personality cult in which he basks, his intemperate and perversely wayward negotiating style and his obvious lack of any sense of humour or honesty. A totally unreliable character; and that is a fatal flaw in a potential partner.
So Turkmenistan is left to its own devices and prior plight, dependence on Russia. To say that Moscow has driven a hard bargain is a colossal understatement of the situation. Gazprom has engineered a way of getting Turkmen gas for next to nothing, while selling it on at a huge mark-up to world markets, notably in Europe. And this is to last for twenty-five years, at least if Niyazov remains in place. Any successor would doubtless want to repudiate the deal. This gives the Russians a new vested interest in Niyazov staying put. A deal that veritably stinks.
The Russians are showing that they can pull their weight around still in their backyard, even while the US tries to muscle in Central Asia too, as well as the Middle East. The Turkmens used to export 90 billion cubic metres annually. Their isolation from even Russia in the last ten years has seen production standards fall, while surveying and prospecting operations have declined. Production in 2002 was only 54 billion cu. m; while in 2003 it is expected to be 68 billion, with still a substantial shortfall. It will be in Gazprom's interest for it to help raise production in the far-flung republic. For Turkmen exports of gas will rise from 6 billion cu. m in 2004 80 billion annually by 2009 and at a price of just US$44 per 1,000 cu. m, only US$22 of which will be in cash, the rest in Russian goods unsaleable on markets elsewhere. Russian gas sells domestically at US$21 per 1,000 cu. m; but internationally at US$90-120 per 1,000 cu. m.
The advantages for Russia are mighty and manifold. An increasing proportion of Gazprom's exports of gas will be from Turkmenistan at the huge mark-up, a growing proportion of Russia's is domestic need for gas will be met by Turkmen output. Russia will be able to export more of its own gas, while not needing to exploit high-cost Artic and Siberian deposits just yet. Meanwhile, the Europeans and other consumers will have an incentive to invest in, or to lend to, pipeline projects guaranteeing continuity of supply.
The losers are the Turkmens and also the Afghans, who were negotiating to take some gas across their territory to Pakistan's Arabian Sea coast. The absence of any settled security along any Afghan route always made it a doubtful proposition.
The Russian route is only too secure, the security that of Russian self - interest. There can be little incentive for the Russians to change the deal. In 2007 there is to be in principle a recalculation of prices, but locked in as they will be, there is little room-for-manoeuvre for the Turkmen. For twenty-five years they will be selling the Russians two billion cu. m of gas in all. 80 billion annually at knock-down rates. One-day Niyazov's personality cult will vanish, and he will be seen for what he is, a vain and silly bungler who sold his country's one main asset for a song.
Putin and Niyazov sign long-term gas agreement in Moscow
Russian President Vladimir Putin, and Turkmen President Saparmurad Niyazov, recently signed in the Kremlin, an intergovernmental agreement of cooperation in the gas sector for a period of 25 years, New Europe has reported.
After the signing of these documents, Putin stressed the special significance of this agreement and contract for the Russian economy. "This decision will create stable conditions for the development of the Russian economy, will make it possible to resolve the problem of the energy balance in the country, and make it possible to develop energy companies within the country and participate with our European partners," Interfax News Agency quoted Putin as saying.
The Russian president noted in particular that Russia would meet its gas obligations to foreign partners in full. He noted that the agreement and contract would be valid until 2028. Putin also stressed that according to the signed documents, half of the price of Turkmen gas will be paid for with supplies of Russian goods to Turkmenistan. "Consequently, we are creating additional jobs and establishing a firm base for the development of our bilateral cooperation with Turkmenistan in many other areas," he said.
In turn, Gazprom CEO, Alexei Miller, told journalists that until 2006 Turkmen gas would be bought at US$44 per 1,000 cubic metres, of which US$22 will be paid for with supplies of Russian goods and technology. Miller went on to say that later, from 2007 onwards, Russia and Turkmenistan would change over to payment for gas at world prices or using a payment formula that is used in contracts with Western partners, which is tied to the oil product basket.
Miller said that in accordance with the signed contract, Russia plans to buy up to 6bn cu.m of gas from Turkmenistan by 2004, by 2006 - 10bn cu.m and by 2009 - up to 80bn cu.m. "The signed agreement and contract have made Russia and Turkmenistan strategic gas partners," he said.
Miller noted in particular that the agreement also deals with Russian participation in the reconstruction of the Turkmen gas transportation network, in gas and energy conservation projects and also in the construction of new competitive gas distribution networks. Miller also announced that by August it is planned to sign an additional agreement with the Turkmen side which will list the equipment to be supplied to Turkmenistan as payment for gas under the new contract.
Niyazov has called the signing of a gas cooperation agreement with Russia "a landmark event in bilateral relations." He stressed that under this agreement, which will be in effect for 25 years, the country is expected to provide Russia with two trillion cubic metres of gas. "This will bring about US$200bn to Turkmenistan. Russia will earn US$300bn," he said. He added that this deal will not make Russia, Ukraine and Iran compete for Turkmen gas. "No one will be short-changed," Niyazov said.
Turkmenistan and Iran have a 25-year agreement on gas supplies. This deal is valid until 2018. However, Turkmenistan's technical capacities restrict delivery to no more than 13bn cu.m of gas, he said, adding that this year's gas shipments will total seven billion cubic metres of gas.
Niyazov said that Turkmenistan plans to provide Ukraine with 35bn cu.m of gas until 2006, stressing that Ukraine makes payments on its gas contracts "strictly according to schedule." Niyazov said that he and his Ukrainian counterpart, Leonid Kuchma, intend to discuss ways to upgrade the gas pipeline to the Caspian coast, as well as gas deliveries until 2006.
Itera, Turkmenistan to sign 10-year gas deal
The Itera oil and gas company and Turkmenistan will sign an agreement on Turkmen gas supplies for the next ten years, Itera President, Igor Makarov, said at a press conference, reports New Europe.
Makarov will go to Turkmenistan to sign the agreement. Itera has produced natural gas since 1998. At present, it is developing six fields in the Yamal-Nenets district and implementing a gas project in the Irkutsk region. Industrial production is underway at three of these fields. Itera is involved in the production of around 30 billion cubic metres of gas per year. It plans to raise its annual output to 50 billion cubic
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