Books on Turkmenistan
Update No: 302 - (27/02/06)
Turkmenistan is without question a remote country, but it is
impacting on areas of the world much in the news at the present time, namely
Europe and Iran. This is by reason of the fact that it is the fourth largest
exporter of natural gas on the planet, with the third or fourth largest
The Turkmenbashi engineers a new gas crisis for Ukraine and Europe?
On February 2nd, Turkmen President Saparmurat Niyazov -- who goes by the
self-awarded title "Turkmenbashi," or "Father of the
Turkmen" - announced plans to cut pensions to the elderly and disabled,
thus encouraging the tradition of offspring caring for their aging parents. On
February 13th, eleven days later, Niyazov declared that by autumn he would raise
natural gas prices in his country to more closely reflect those of the world
market. Niyazov has apparently unquestioned authority in his country, and his
move is likely to affect not only Russia and Ukraine, but gas customers in
Europe as well.
It is clear from these two statements that Turkmenistan's economy is in some
trouble. Raising natural gas prices to market levels is one obvious remedy.
The prices Niyazov is proposing are certain to anger Ukraine, which was forced
to accept new terms for its energy purchases following the Jan. 1st-3rd gas
crisis caused by Russia. After Gazprom cut off supplies to Ukraine, RosUkrEnergo
(which is controlled in equal parts by Gazprom and the Austrian holding firm
Raiffeisen) struck a deal with Ukraine's Naftogaz -- forming a new company
called UkrgazEnergo, which will sell a mixture of Russian and Central Asian gas
Turkmenistan currently contributes supplies to this venture at US$65 per
thousand cubic meters. Under terms of a certain clause, RosUkrEnergo can
initiate pricing changes if the cost of its own supplies shifts, and Kiev would
not be able to reject the increase.
Niyazov has proposed hiking Turkmenistan's prices to US$100 per thousand cubic
meters. Ultimately, that could cause Ukraine to siphon off more natural gas
supplies that are intended for customers in Europe -- and bring down the
continent's already considerable dissatisfaction upon Kiev. In mid-February,
it's still quite cold, and the Europeans at this point are feeling rather
defensive about their energy supplies.
Of course, any business deal that relies on supplies from Turkmenistan, as
though Niyazov was a reliable and consistent partner entails trouble from the
beginning. The Turkmenashi previously has cut off gas supplies to his country's
largest customer, Russia, with no signs of hesitation or guilt, and could be
expected to do so again if it serves his purposes.
Gazprom chief Alexei Miller visited Ashgabat on Feb 18th, at President Vladimir
Putin's request, to "negotiate" the possibility of a price increase in
Turkmenistan. But even though Russia is the country's chief trade partner and
protector, Niyazov may not necessarily acquiesce to Moscow's wishes.
Ukraine, of course, has been through this before. A third gas cutoff would
further damage its reputation in the Europe it so longs to join. But in this
case as the others, there's little Kiev can do to balance out the situation.
Europe, on the other hand, has sought to diversify its energy supplies, and
Niyazov's latest pronouncement should push it further toward that goal. At least
for Germany, the North European Gas Pipeline (NEGP), although several years off
completion, becomes a more viable alternative to the supplies currently being
sent via third parties. For others, reliance on nuclear power and other sources
will continue to be important.
In either case, it is likely that so long as their energy supplies remain at
least partially subject to the mystery that is the Turkmenbashi, the Europeans
will be ever more anxious to move away from natural gas shipments originating in
Still, in the interim they have no other choice but to deal with the Turkmens.
PM Yekhanurov expects to sign the intergovernmental gas agreement with
Turkmenistan is the largest gas exporter to Ukraine. In 2004, Ukraine bought
36 milliard c. m. of Turkmen gas which made up 45% of its needs. It is of vital
importance to Kiev to come to an understanding with the eccentric dictator of
Ashkabad, even to extending him the red carpet treatment any time soon.
PM Yuri Yekhanurov stated Ukraine does not yet have an intergovernmental
agreement on gas supply with Turkmenistan. "There is no intergovernmental
agreement with Turkmenistan, but it necessary to have one in 2006," said
the Ukraine PM.
As a reminder, in December 2005 Ukraine and Turkmenistan signed the provisional
contract-2006 on 40 milliard c. m. of gas at US$44 per 1,000 c. m. At the end of
December 2005, PM Yekhanurov stated Ukraine would expect to sign an agreement
with Turkmenistan on gas supply until 2031.
"I have charged corresponding officials with preparation of documents for
the visit of Turkmen President Saparmurat Niyazov. I think we will manage to
prepare the long-term agreement," said PM Yekhanurov.
Iran interested in purchasing more gas from Turkmenistan
Iran is in the spotlight of the world's media right now for pressing ahead with
a nuclear power programme. This seems to have a military logic, given that it
possesses huge oil reserves, the second or third largest in the world, while it
neighbours Turkmenistan that can provide it with an abundance of natural gas at
cheap rates, not to speak of plentiful hydro-electricity from Tajikistan.
During a telephone conversation on February 12th with President Niyazov, the
foreign minister of Iran informed him that his country was interested in
purchasing more natural gas from Turkmenistan.
Manouchehr Mottaki, foreign minister of Iran, told Niyazov that a high powered
delegation would soon visit Ashgabat to finalize the volumes and price of the
natural gas that Iran wants to buy in 2006.
At present Iran is purchasing 8 billion cubic meters of Turkmen gas annually.
He confirmed that Iran had agreed to pay a higher price for Turkmen gas and the
necessary document would be signed in near future when an Iranian delegation
Mottaki told him that his country was keen to expand broader cooperation,
especially in the energy sector, with Turkmenistan. He said that Iran would like
to substantially increase the volumes of gas it buys from Turkmenistan. The
sides are expected to sign an agreement of partnership in this sphere during the
proposed meeting of the heads of state in the spring.
Can Turkmenistan 'produce the goods'?
Given the opaque nature of the regime, it is not surprising that not only
existing national customers like Russia and Ukraine are increasingly asking if
the output of these gasfields is able to meet existing contractual obligations.
For many years there has been a putative plan, currently in the doldrums, to
build a pipeline across Afghanistan to Pakistan, and beyond to energy-hungry
India. This was always unlikely because of the need for the pipeline to travel a
part of the way through 'lawless tribal' and warlord territories whose chiefs
would continue to exact massive sums to allow transit. But now the suspicion
that Turkmenistan may not be able to produce enough product to supply existing
contracts, is reason enough for this project to be pigeon-holed.
Turkmenistan may play a part in EU energy security
Turkmenistan might play an important role in improving energy security in
Europe, US Deputy Assistant Secretary of State, Matthew Bryza, said in Ashgabat
on January 13th after meeting with Turkmen President, Saparmurat Niyazov, to
discuss US-Turkmen cooperation, Turkmenistan.ru reported, citing state news
The US Ambassador to Turkmenistan, Tracey Ann Jacobson, attended the meeting.
The sides emphasised the increased importance of searching ways for partnership
both on the regional and bilateral level that would help further strengthen
economic ties as a factor of universal progress and prosperity. After the
meeting, Bryza said the conversation proceeded in a constructive and trusting
manner, and was marked by a high level of understanding, trust, and openness
between the two states. "We also discussed the important role Turkmenistan
can play in bolstering energy security by injecting more commercial competition
in the European energy market," Bryza stressed. Niyazov and Bryza also
discussed cooperation in the humanitarian area and interaction in providing
global security and stable peace, it said. Among positive trends, the US
diplomat mentioned Turkmenistan's initiatives in combating the proliferation of
weapons of mass destruction, the press service said.
China seeks economic cooperation with Turkmenistan
Vice chairman of China's State Committee on Development and Reform, Jian Gobao,
has reiterated his country's desire for joint projects with Turkmenistan. The
statement came during Gobao's meeting with Turkmen president, Saparmurat Niyazov,
in Ashgabat on January 19th, the presidential press service said, Interfax News
Chinese Ambassador to Turkmenistan, Lu Guichen, and general director on
Development and Exploration of China's National Petroleum Corporation, Van
Dunzin, also attended the meeting. "China has been watching the dynamic
development of Turkmenistan and the steady implementation of its foreign
economic strategy aimed at mutually profitable cooperation in developing its
rich subsoil hydrocarbon resources with great interest," the press service
quotes Gobao as saying. Gobao added that China is looking forward to Niyazov's
visit to the People's Republic of China in spring which is designed to give
renewed impetus to the development of bilateral ties. The guest also noted that
preparation for the meeting at the top level is at full speed in China. In this
connection, a number of Chinese ministries and establishments are working over
specific proposals on the expansion of partnership. Niyazov, in turn thanked the
guest for the high estimation of progress made by his county and noted that it
was the result of the active cooperation with foreign partners, including with
China, with which Turkmenistan has very close relations.