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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: 304 - (28/04/06)
Playing the Chinese card
Turkmenistan may be a remote country, but it is having an impact on areas of the
world much in the news at the present time, namely China, 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 reserves.
Niyazov said on April 12th that his country plans to sell China 30 billion cubic
meters (bcm) of natural gas per year for 30 years starting in 2009, Russian
business daily Kommersant reported.
Turkmenistan is also committed to supply Russian energy giant Gazprom with 80
bcm of gas, most of which will be exported to Ukraine and Europe, in 2009.
Kommersant said the Sino-Turkmen agreement could jeopardize the Gazprom contract
because Turkmenistan's current natural gas production stands at 60 bcm per year
and is growing slowly. There are also contracts to supply Gulf states with gas.
Niyazov and Chinese President Hu Jintao signed a framework agreement on oil and
gas cooperation in Beijing on April 3rd. Niyazov was in Beijing for a six-day
visit to China. The trip underlined the growing ties between the two countries
in culture, education, trade, and, in particular, energy.
Niyazov's trip to China was rich in ceremonies, in line with Turkmenbashi's
eccentric tastes. When Hu Jintao welcomed his Turkmen counterpart in Beijing's
Tiananmen Square, Niyazov presented a Turkmen Ahalteke horse to the Chinese
president. Niyazov also invited Hu to visit Turkmenistan to lay the foundations
for a future pipeline from Turkmenistan to China. The Chinese leader accepted
the invitation with gratitude and said he would visit.
A ceremonial presentation of a Chinese translation of the second part of Ruhnama,
a collection of Niyazov's writings, took place on April 3rd at the People's
University of China. Chinese Culture Minister, Sun Jiazheng, hailed the
philosophical importance of Ruhnama, describing it as a "truly unique book
that will serve to strengthen the ties of friendship" between Turkmenistan
and China. At a meeting with Turkmen students studying in Shanghai, Niyazov
urged them to study the spiritual experience of Chinese people, "their
ancient culture, in other words, everything that helped contemporary China
achieve such great results." Turkmenbashi also presented each of the
students with US$1,000,Turkmenistan.ru reported.
Economic ties between Turkmenistan and China have been growing fast but began at
a very low level. In 2005, trade between Turkmenistan and China reached some
US$180 million, still up by 7.5 times over 2000. In January-March 2006,
bilateral trade amounted to US$60 million. So far, Chinese companies have
launched 37 investment projects in Turkmenistan, totalling some US$420 million.
But the new agreement on oil and gas cooperation is the major development to
emerge from the trip. Article 2 of the agreement says China will purchase 30
billion cubic meters (bcm) of natural gas annually at the Turkmenistan border
over 30 years, starting from the date the Turkmenistan-China gas pipeline is
commissioned in 2009. Both sides also pledged to jointly explore and develop gas
deposits on the right bank of the Amu Darya River under the terms of the
production-sharing agreement (PSA) in order to fill the Turkmenistan-China gas
pipeline. Both sides also pledged to set gas pipeline project terms and gas
prices by December 2006.
Furthermore, Article 4 says, "The price for natural gas will be set at
reasonable levels and on a fair basis, basing on the comparable international
market price." China also pledged to negotiate with the governments of
transit countries in order to reach agreements "on mutually beneficial
terms of transit of natural gas through their territories." However,
Article 9 offered a caveat by stating, "The present agreement does not
affect the rights and obligations of the parties arising from other
international agreements."
In an interview with the Chinese news agency, Xinhua, Niyazov said that
Turkmenistan "is ready to supply China with 30-40 bcm of gas, our gas
deposits are known, and we have rich reserves." He added, "Cooperation
in the oil and gas field will be built up on the basis of setting up a joint
venture or dividing the output."
The Turkmen president said his country could deliver on its pledges due to
"the enormous energy reserves of the country, which are estimated at 12
billion tons of oil and 22 trillion cubic meters of gas." "We can
realize these opportunities together, including the joint development of the
Turkmen shelf in the Caspian, Niyazov said, Turkmen TV channel one reported.
In December 2005 the Turkmen president said that Kazakstan and Uzbekistan were
in talks to construct a pipeline from the Turkmen border to China. The president
also said that gas reserves on the right bank of the Amu Darya River, near the
border with Uzbekistan, would serve as a basis for future supplies of natural
gas to China. When a Turkmen government delegation visited Beijing in late 2005,
they reportedly discussed pricing Turkmen gas at US$80/tcm.
During the April trip leaders of the two countries signed a joint declaration
between Turkmenistan and China as well as a bilateral agreement on cooperation
in fighting terrorism, separatism, and extremism. They also inked an agreement
between the Turkmen Ministry of the Oil and Gas Industry and Mineral Resources
and China National Petroleum Corporation on cooperation in the oil and gas
sector and two framework loan agreements totalling 200 million Chinese yuan
(US$25 million).
The agreement on a Turkmenistan-China gas pipeline hardly came as a surprise. On
January 18th, Niyazov had met with the deputy head of the Chinese State
Committee on Development and Reforms, Zhang Guobao. They reportedly discussed a
draft bilateral agreement on Turkmen gas supplies to China. The Chinese
officials reportedly expressed interest in projects in Turkmenistan, notably
upgrading the Seidin refinery.
Niyazov's agreements on Turkmen gas supplies followed similar agreements between
China and Russia's Gazprom giant signed on March 21st. There are concerns
whether Ashgabat will be able to honour its commitments. It is obvious that
there will not be enough Turkmen gas for everyone, while the gas pipeline
agreement with China is also aimed at putting some pressure on Russia in the
discussion on future prices for Turkmen gas. Turkmenistan is somewhat infamous
for signing 'agreements' that never progress to contracts, let alone actual
supply.
In April 2003, Russia and Turkmenistan signed a framework agreement on gas
cooperation and a 25-year contract on gas supplies to Russia. Niyazov pledged to
supply up 100 bcm/year of gas to Russia from 2010 onward or a total of 2
trillion cubic meters in 25 years at US$44/tcm. Coupled with Niyazov's earlier
promises to supply 8-10 bcm of gas to Iran, Turkmenistan would need to double
its current gas output to deliver on all its pledges.
Russia has been keen to boost energy cooperation with Turkmenistan. "I
strongly support your suggestion to broaden our interaction in energy production
and transportation," Russian President Vladimir Putin told Niyazov at a
meeting in the Kremlin on January 24th. In response, Niyazov pledged to
cooperate with Russia in gas transit projects to funnel natural gas both to
Europe and eastward.
However, Russia and Turkmenistan have disagreed over gas prices. In January
2006, the Russian media reported that Turkmenistan was planning to raise the
price for its gas deliveries to Gazprom to US$85 per 1,000 cubic meters (tcm,
equal to or 35,300 cubic feet) from July on, up from the US$65 level agreed to
for the first half of this year. The mention of "fair prices" on gas
in the Turkmen-Chinese agreement is hardly a coincidence, as Niyazov has
previously accused Russia of insisting on unfair prices for Turkmen gas.
In the wake of the visit, Niyazov described his talks in China as "a
complete success." He also hailed the agreement on a Turkmenistan-China gas
pipeline as "a document of particular importance" and noted
"promising prospects for a long-term partnership" between the two
countries.
The Turkmenbashi engineers a new gas crisis for Ukraine and Europe?
On February 2nd, Turkmen President Saparmurat Niyazov -- who goes by the
title "Turkmenbashi," or "Father of the Turkmen" - announced
plans to cut pensions to the elderly and disabled, making the mealy-mouthed
claim that this would "encourage 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 January 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,
itself a mystery as to ownership) struck a deal with Ukraine's Naftogaz --
forming a new company called UkrgazEnergo, which will sell a mixture of Russian
and Central Asian gas to Ukraine.
Turkmenistan currently contributes supplies to this venture at US$65 per
thousand cubic meters. Under terms of a certain clause, RosUkrEnergo (read,
Gazprom) 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. 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 Turkmenbashi 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 February 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) 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
the East.
Still, in the interim they have no other choice but to deal albeit
indirectly,with the Turkmens.
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 potential 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 power
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 Iranian delegation visits
Turkmenistan.
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.
Niyazov goes ecological
Turkmen President Saparmurat Niyazov is always on the go, with a new idea in
tow. He has ordered his government to begin planting a forest of trees to
improve the climate of the desert nation. Niyazov's order came during a cabinet
meeting that was broadcast on state television.
Niyazov said his plan foresees a forest of trees stretching 1,000 square
kilometres across the country. He said every government ministry is tasked with
planting some of the trees within three years.
He also ordered that construction be speeded up on an artificial lake in the
desert, which is aimed at opening up agricultural potential. Work on the lake
started in 2000.
More than 80 per cent of Turkmenistan's territory is covered by the Kara Kum
desert. Other areas of the country are affected by desertification.
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AGRICULTURE
Turkmenistan to purchase American grain harvesters
Turkmen President, Saparmurat Niyazov, recently issued a decree authorising
Turkmengallaonumleri Association to sign a contract on the purchase and delivery
in Turkmenistan of Case and John Deere grain combines, spare parts and other
expendable materials, Turmenistan.ru reported.
The winner of the tender announced a contract worth US$9m was awarded to
American Machinery Company. Turkmenistan acquired over 1,500 grain harvesters
made by world leading producers, American companies Case and John Deere in
recent years.
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CONSTRUCTION
Ashgabat signs 30m Euro Caterpillar deal
Turkmenistan signed a US$30 million contract with US heavy machine maker
Caterpillar for the purchase of other earth moving equipment to speed up the
construction of an artificial lake in Central Karakums designed to significantly
expand the acreage of irrigation in Turkmenistan, Turkmenistan.ru reported.
Turkmen President Saparmurat Niyazov earlier in March ordered that the
construction of a 2,060-square kilometres artificial lake that began in 2001
should be accelerated. On March 23, the document was signed by the ministry of
water management of Turkmenistan and German Zeppelin International AG, an
official dealer of Caterpillar in Turkmenistan. Caterpillar's vice-president
Paolo Fellin and Zeppelin's president Ernst Suzanek arrived in Ashgabat to sign
the contract. After the signing ceremony the leader of Turkmenistan extended
sincere gratitude to representatives of both companies "for adopting a
creative and friendly approach in cooperation with Turkmenistan" noting
that prospects of signing one more contract on purchase of road-construction
equipment would be considered in near future.
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FOREIGN RELATIONS
Ashgabat, Beijing to develop ties
Turkmen President, Saparmurat Niyazov, recently visited China. He said that
developing relations with China will have special significance for Turkmenistan.
It is noted that both countries enjoy a long history of development, which is
characterised by exchanges on the ancient Silk Road linking China and Central
Asian nations, including Turkmenistan, reported Turkmensitan.ru.
China was the first country to recognise the sovereignty and independence of
Turkmenistan in 1991 and also opened an embassy in capital Ashgabat, added
Niyazov.
Since then, China has provided Turkmenistan with assistance in an all-round way
to help the latter build an independent state, he added. Last May in Moscow,
Niyazov and his Chinese counterpart, Hu Jintao, discussed ways of carrying out
mutually beneficial cooperation between their two countries, especially in the
field of oil and natural gas.
Noting the good prospects for bilateral cooperation in the field, Niyazov said
the two countries are currently considering plans to lay a natural gas pipeline
from the the Amu-darya River region in Turkmenistan to the Xinjiang Uygur
Autonomous Region in northwest China. He invited Chinese firms to Turkmenistan
to help tap the oil resources around the Caspian Sea areas and also join in the
exploitation in the existing land-based natural gas fields, said Niyazov.
Turkmenistan and China have always supported each other in political affairs, he
said, adding that the two countries can discuss any issue of mutual concern,
reach a consensus and then conduct cooperation on the basis of mutual benefit.
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