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Books on Turkmenistan
REPUBLICAN REFERENCE
Area (sq.km)
488,100
Population
4,863,169
Principal
ethnic groups
Turkmens 77%
Uzbeks 9.2%
Russians 6.7%
Capital
Ashkhabad
Currency
Turkman Manat
President
Saparmurat Niyazov
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Update No: 301 - (30/01/06)
Launch of internal purge
Turkmen President Saparmurat Niyazov maintained his country's profound isolation
from the outside world even as he has engineered a wide-ranging purge that
eliminated longtime allies, rendering speculation about the future of his
maddeningly opaque regime more difficult than ever.
His 'allies' are little more than ciphers, with all power concentrated in his
hands. But since an unsuccessful attempt on his life on November 25th, 2003, he
has become increasingly paranoid, as is the wont of hated dictators.
Balance-sheet of 2005
Virtually all of Turkmenistan's limited interactions in 2005 with the outside
world involved the country's exports of natural gas. The keynote was an effort
to obtain higher payments from Russia and Ukraine amid continuing uncertainty
over Turkmenistan's reserves and production capacity in 2006.
In September, an analyst with the Asian Development Bank stated that production
forecasts for Turkmenistan's Daulatabad gas field may not be sufficient to
justify the construction of a pipeline through Afghanistan to Pakistan. In June,
Gazprom voiced concerns about Turkmenistan's reserves, noting that Ashgabat has
been slow to provide a promised audit. The issue is particularly important to
Gazprom, which is slated to boost imports from Turkmenistan to 60 billion-70
billion cubic meters a year by 2007, while Russian reports have suggested that
current production levels are actually closer to 45 billion.
Meanwhile, Turkmenistan attempted in December to impose a price hike -- from $44
per 1,000 cubic meters to $60 -- on Ukraine and Russia for 2006 gas shipments,
although it remains unclear whether Turkmenistan will be able to meet its
planned contractual obligations to both countries. Negotiations with Russia have
not yet produced an agreement, and Ukrainian claims that a deal with Ashgabat
has been reached still lack Turkmen confirmation.
On the margins, Turkmenistan explored expanded energy cooperation with China.
Turkmen Deputy Prime Minister Atamurat Berdiev visited China in early December,
reporting back that China is interested in gas imports from Turkmenistan.
Turkmen President Niyazov, who spent much of 2005 shuffling and reshuffling the
management of the country's energy sector, is scheduled to take a rare trip
abroad to China in April 2006.
2006 so far
A deal was reached between Kiev and Moscow in early January that would allow
Turkmen gas to continue to be exported via Russia to Ukraine. It is not yet
clear at what price the gas will be bought, but a large rise is unlikely.
Turkmenistan has nowhere else to sell its gas and Ukraine is in a classic
monopsony (the consumer equivalent of monopoly) position. President Viktor
Yushchenko says that roughly US$50 per 1,000 cubic metres is the relevant
ball-park - under one quarter of the world market price.
Turkmenistan pays a heavy price for its buffoon of a dictator, who so disgusted
Western energy company officials several years ago with his arrogance and
conceit that they broke off all negotiations concerning an alternative Caspan
Sea gas pipeline to Turkey and beyond. But then it is difficult to deal in
mundane matters with a man who thinks that he equals Buddha, Jesus and Mohammed
for spiritual profundity.
While natural gas production by Turkmenistan rose 8% last year to 63bn cubic
metres, officials said, the Central Asian state is prepared this year to
massively crank up output in response to increased demand from Ukraine.
Gas exports last year were about two thirds the amount produced, with exports
rising from 42bn cubic metres to 45.2bn cubic metres, the state statistics
institute said.
However this year Turkmenistan plans to raise gas production by 37 pct to 80bn
cubic metres, of which all but 2bn cubic metres will be exported, President
Saparmurat Niyazov said in his New Year television address.
The chief export destination will be Ukraine, which will receive 40bn cubic
metres of Turkmen gas this year, followed by Russia with 30bn cubic metres and
Iran with 8bn cubic metres.
****
The following is an informed and balanced analysis of the vital trading
relationship with Ukraine:-
Russian-Ukrainian accord does not ease regional security concerns
Igor Torbakov Eurasianet
Although Russia and Ukraine have settled their differences over the price of gas
deliveries, concerns over energy security are lingering in Europe. The
maintenance of steady supplies could depend in part on unpredictable
Turkmenistan.
The complex pricing plan forged by Russia and Ukraine involve at least two
tricky points, most independent energy analysts suggest. First, it dramatically
enhances the role of a shady intermediary company that will serve as the sole
gas provider to Ukraine. Second, the deal appears to be hinging on Central Asian
supplies, in particular on gas coming from Turkmenistan, a country whose energy
policy is notoriously fickle.
Under the terms of the five-year accord, Gazprom, Russia's state-run energy
monopoly, will sell gas to an intermediary, RosUkrEnergo, at a rate of US$230
per thousand cubic meters (tcm) -- the price that it had insisted Ukraine pay.
Ukraine will then buy gas from RosUkrEnergo for US$95/tcm - nearly twice what it
had previously been paying Gazprom. RosUkrEnergo, which is owned by Gazprombank
and a Swiss subsidiary of Austria's Raiffeisen Bank, claims it can pay and
charge different prices because it will also be buying gas from the Central
Asian nations of Kazakhstan, Uzbekistan and Turkmenistan for comparatively low
prices. According to Ukraine's President Viktor Yushchenko, Turkmen gas will
cost roughly US$50/tcm.
The deal has raised the eyebrows in many quarters. RosUkrEnergo opaque operating
structure and methods have prompted many energy analysts to believe the company
to be a front, designed to facilitate corrupt practices. Its true beneficiaries,
some well-informed sources contend, can be found among the Gazprom's senior
management and the Kremlin leadership. In addition, Raiffeisen Bank reportedly
represents unnamed Ukrainian investors. The deal has already met considerable
political opposition in Ukraine.
Another dicey aspect of the deal, energy analysts say, is the assumption that
the Central Asian nations will continue to serve as reliable suppliers at
existing, rock-bottom prices. While Kazakhstan and Uzbekistan are relatively
minor gas producers, Turkmenistan, which supposedly holds major gas reserves,
has exhibited signs of discontent over existing gas prices.
Turkmen leader Saparmurat Niyazov is likely to try to take advantage of the
Russian-Ukrainian pricing dispute by seeking a better price for Turkmen energy,
some experts suggest. "Turkmenistan can now put forward the argument to
Russia that 'if you do it, why can't we' and unilaterally increase its
prices," says Eduard Poletayev, editor of the Kazakhstan-based journal Mir
v Azii.
Last January, Turkmenistan briefly cut gas supplies to both Russia and Ukraine
in a price dispute. The recent Russian-Ukrainian gas accord appears to give
Ashgabat more leverage. Given the terms of the Russian-Ukrainian agreement,
analysts expect that over the next five years, Kyiv will try everything possible
to reduce the volume of Russian imports and up the level of cheaper Turkmen
energy. But the tough question is: how long will the mercurial Niyazov tolerate
the energy status quo. Turkmen officials have already indicated that the country
may start charging a global market rate starting in 2007.
If Niyazov finds himself unable to get a price he thinks Turkmenistan deserves
from Ukraine and Russia, he could always order a cut-off in supplies. If a
cut-off occurs, Ukraine would likely continue drawing fuel from the pipeline,
possibly leading to a repetition of the situation that occurred during the first
days of 2006, when the European customers suffered shortages caused by the
Russian cut-off.
In the eyes of many European policymakers, the Russia-Ukraine gas dispute
exposed Europe's deep dependence on Russia. To reduce that vulnerability, they
argue, Europe should seek out other gas suppliers and develop alternative fuels.
EU energy officials have called for a "clear and more collective
policy" concerning energy security.
Turkey, an EU candidate country, is among the countries most dependent on Russia
for energy. Ankara gets around 15 billion cubic meters of Russian gas annually,
which constitutes more than 60 per cent of national consumption. The gas is
delivered via two routes: a western route that runs through Ukraine, Moldova,
Rumania and Bulgaria; and the so-called Blue Stream pipeline under the Black
Sea. With Blue Stream transporting around 16 billion cubic meters of gas
annually in the coming years, Turkey's energy dependency on Russia should
increase dramatically, a number of Turkish experts say. This situation could
create complications for Ankara's foreign policy, in particular in the South
Caucasus and Central Asia, where Russian and Turkish interests often clash.
In his annual address, Gen. Hilmi Ozkok, Turkey's Chief of the General Staff,
specifically emphasized the importance of energy security in the country's
strategic calculus. According to a recent report published by the Radikal daily,
Turkey's National Security Council also considers the country's dependence on
Russia for energy as an issue of strategic security.
On November 17, during the Blue Stream inauguration day, Russian President
Vladimir Putin proposed the construction of a second Black Sea pipeline for both
oil and gas. Such a route could raise capacity from this year's 3.7 billion
cubic meters of gas to around 30 billion cubic meters. Many Turkish analysts
have reacted cautiously to the proposal. "Turkey cannot be so dependent on
any single energy provider," argued Suat Kiniklioglu, the head of the
Ankara office of the German Marshall Fund of the United States. "Turkish
decision-makers would be well advised to rethink Turkish energy
diversification," he added in a commentary published by the Turkish Daily
News.
Editor's Note: Igor Torbakov is a freelance journalist and researcher who
specializes in CIS political affairs. He holds an MA in History from Moscow
State University and a PhD from the Ukrainian Academy of Sciences. He was
Research Scholar at the Institute of Russian History, Russian Academy of
Sciences, Moscow; a Visiting Scholar at the Kennan Institute, Woodrow Wilson
International Center for Scholars, Washington DC; a Fulbright Scholar at
Columbia University, New York; and a Visiting Fellow at Harvard University. He
is now based in Istanbul, Turkey.
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ENERGY
Gazprom to buy 30 bcm of Turkmen gas in 2006
Turkmen President, Saparmurat Niyazov, and Russian gas giant Gazprom's CEO,
Alexei Miller, on December 29th in Ashgabat signed an agreement on Turkmen
natural gas shipments to Russia in 2006, Interfax News Agency reported.
According to the agreement, Gazprom is to buy 30 billion cubic metres of gas
from Turkmenistan in 2006 at 65 Euro per 1,000 cubic metres. "The operating
conditions for 2007 onward will be defined in the second half of 2006 as implied
by the effective contract until 2028," the release said. Earlier the price
of Turkmen gas was set at 44 Euro for 1,000 cubic metres. In their statements
following the signing ceremony, Niyazov and Miller stressed the importance of
this document not only for the successful partnership in the gas field but for
Turkmen-Russian relations as a whole and for strengthening ties of friendship
and cooperation between Turkmenistan and Russia.
The Russian delegation also discussed aspects of bilateral cooperation in the
gas sector in 2006 and onward. "Participants in the meeting were satisfied
with the dynamic development of cooperation and the implementation of all
previous understandings. The sides acknowledged the significant rise in prices
on the market of fuel, materials and equipment for the oil and gas sector and
agreed to adjust the price of Turkmen gas sold to Gazprom, with due
consideration of these factors," a Gazprom release read.
Niyazov also thanked the Russian leadership and Gazprom for the efforts to
develop relations between the two countries and said Turkmenistan would always
adhere to this partnership. "We are ready to jointly access the world
markets and develop energy resources," Niyazov said.
He added, "We recently signed a contract on the delivery of 40 billion
cubic metres of gas to Ukraine. The deal envisions a slightly lower price, but I
think that it is just a matter of time," The government
Turkmendovletkhabarlary agency quoted Niyazov as saying.
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FOREIGN COOPERATION
Niyazov, Nazarbayev discuss cooperation
Turkmen President, Saparmurat Niyazov, and his Kazak counterpart, Nursultan
Nazarbayev, discussed bilateral cooperation in a telephone conversation,
Turkmenistan.ru quoted the state news service of Turkmenistan as saying.
During the conversation, both presidents discussed the current condition and
prospects of economic and humanitarian cooperation, paying special attention to
oil and gas, including the development of Caspian resources.
In this context the presidents agreed to create working groups to prepare
interstate agreements on concrete projects required to bring the bilateral
relations to a qualitatively new level. Some other issues of mutual interest
were also considered. Niyazov congratulated Nazarbayev on his convincing victory
in the presidential election and the forthcoming inauguration. The presidents
exchanged New Year wishes of health and successes for the sake of the Turkmen
and Kazak peoples. They expressed their certainty that relations of friendship,
brotherhood, and neighbourly relations between their republics would continue
and wished peace and prosperity to the peoples of both states.
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