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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 6,010 7,672 4,000 110
GNI per capita
 US $ 1,120 1,200 950 131
Ranking is given out of 208 nations - (data from the World Bank)

Books on Turkmenistan


Area ( 


ethnic groups 
Turkmens 77%
Uzbeks 9.2%
Russians 6.7%


Turkman Manat

Saparmurat Niyazov

Update No: 309 - (26/09/06)

The state of the gas world
Market forces always prevail in the end. Worldwide energy shortages and the emergence of China and India as economic giants have tilted things the way of the Central Asian energy producers, notably Turkmenistan. 
Even as perverse a figure as Saparmurat Niyazov, the dismal dictator of the country, could hardly fail to benefit, sitting on the world's fifth largest gas reserves. He has been able to do a good deal with the Russians at last.
But they have not necessarily been the long-term losers.

Gazprom loses out in Asia; but wins in Europe?
Under its August 5th agreement with the Turkmen government, the Russian gas monopoly, Gazprom, decided to buy Turkmen gas at a price of US$100 per a thousand cubic meters in 2007-2009, up 50% on current prices for its purchases of Turkmen gas. It will purchase 12 billion cubic metres in 2006 and 50 billion cubic metres every year in 2007-2009. In other words, it will pay US$6 billion more than it was going to, but will control all Central Asian gas exports to Europe as a result. 
The media and industry press have not failed to notice the new price, or its implications. Only in July Gazprom flatly refused to pay it, and even walked out of the talks, but now has changed its tune. Apparently, a serious change in the world gas market compelled the Russian monopolist to give in. 

China counts 
There are several factors influencing the major players in the world market today, not least the Chinese option.
China has become much more active in the Caspian region. The efforts of the Chinese companies to gain a foothold in the energy industries of Turkmenistan, Kazakhstan and Uzbekistan are starting to threaten Gazprom's domination in Central Asia, which rests on its monopoly ownership of the Europe-bound gas pipelines. 
The Chinese have crucially offered Ashgabat to build an eastward-bound export pipeline with a capacity of 30 billion cubic metres of gas per year. They are going to sign a production-sharing agreement for the right bank of the Amu Darya River, which is going to become a new gas province. They have also stepped up their involvement in developing gas resources in Uzbekistan and Kazakhstan with a view to transporting gas to China's western provinces. 
These steps have given Central Asian countries more room for manoeuvre. Turkmen President Saparmurat Niyazov has spoken more than once about the strategic importance of the Russian direction of the Turkmen gas exports. He has made the point that the construction of new pipelines, including the one going to China, which he promised to commission by 2009, will not prejudice cooperation with Moscow. Nevertheless, Ashgabat has definitely gained more bargaining chips in talking with Gazprom. 

Europe beckons too
Apart from eastern-bound exports, the discussion of a pipeline under the Caspian Sea to supply Europe with gas bypassing Russian routes has become markedly more active. The Kommersant newspaper reported on September 6th that Polish Prime Minister Jaroslaw Kaczynski is going to visit Washington with the proposal on a joint construction of a trans-Caspian pipeline to supply Europe with gas bypassing Russia. The Polish newspaper Rzeczpospolita wrote that in order to receive US$5 billion for this project, the Polish authorities are ready to sign with the US a lease for the construction of a missile base to become part of the US ABM system. 
Although in Kazakstan the subject is avidly discussed at government level, only Turkmenistan has the resources for this gas project. Apparently, Gazprom will now pay to freeze it as well. Niyazov emphasized: "We'll primarily supply gas to Russia. Don't worry that Turkmenistan will walk away with its gas. We are not ready to discuss the trans-Caspian pipeline." 
Higher Turkmen gas prices will not be a big problem for Russia. Europe pays US$230-US$250 for a thousand cubic metres of gas, and Gazprom will have its share of the profit anyway. Moreover, having contracted almost all of Turkmenistan's export resources until 2009, it has actually protected itself against competition in Central Asian gas supplies. A panic demand for gas in Europe, generated by the recent apprehensions about its near shortage, is bound to send gas prices even higher. Today, Europe's major energy concerns are lining up to extend long-term contracts with Gazprom, but it is not likely to meet this demand without Central Asian gas. In the last few years, Gazprom has launched its own gas industry and blocked a speedy growth of its independent production in Russia. It is now compelled to negotiate with Ashgabat for this reason. 
Many commentaries analyse possible changes of gas prices for Ukraine. There are several indicators that it will have to pay much more starting in January 2007. After the talks between prime ministers Mikhail Fradkov and Viktor Yanukovych in middle August, it became clear that Ukraine is ready to pay more than US$95 per a thousand cubic meters. Yanukovych quoted US$110 as an acceptable price for the local economy. On August 28, his deputy Nikolay Azarov reported that the Ukrainian budget for 2007 is based on the price of US$135. Perhaps, he wanted to warn his compatriots in advance that they should expect a price rise next January. 
One gets the impression that Moscow already has tentative agreements on gas prices for Ukraine in 2007. This is probably why the Russian gas giant has so easily accepted Niyazov's terms. In this case, Gazprom's concession becomes a clever tactical step in the difficult struggle for control over Ukraine's gas transportation system, which, regardless of colour, none of its governments wants to share if the price stands at US$95. Now it will grow to no less than US$150. 

Gazprom in charge; but problems ahead
New prices in Turkmen-Russian gas cooperation are the first sign of change on the post-Soviet gas market. For the time being, Gazprom has been quite prompt and flexible. 
The market situation has helped as well. But the competition for resources keeps growing, and control costs more and more. 
Moreover, stepping up its efforts in the foreign market, Gazprom is neglecting its own production. In January-July 2006 gas production went up by 2.5% over the relevant period in 2005, whereas gas exports went up by 24.9%. 



Ukrainian energy minister hopes to restore ties

Ukrainian-Turkmen gas relations have taken a turn for the worse, largely due to mistakes on the Ukrainian side, Ukrainian Fuel and Energy Minister, Yury Boyko said.
The new heads of the fuel and energy ministry will do all they can to restore the partnership to its former state, Boyko added. "We will be forced to take effective measures to restore trust between the partners and re-establish direct contracts, which are beneficial for both sides," Boyko said at a press conference in Kiev on August 14th, Interfax News Agency reported.
Top Ukrainian government officials will soon begin preparing for a visit to Turkmenistan, Boyko said.
Previous visits by Ukrainian officials were not properly prepared, and the delegations did not take Turkmenistan's position into account, Boyko said. Among the mistakes Ukraine has made in its relations with Turkmenistan, Boyko named the loss of warranted contracts to sell Ukrainianj goods and the end to gas trade under direct contracts. Boyko said, however, that Ukraine is not willing to buy Turkmen gas at a considerably higher price than before.



Niyazov hails economic ties with China

Turkmenistan President, Saparmurat Niyazov, welcomed the Chinese delegation headed by Yu Guang Zhou, deputy trade minister of the China People's Republic, in the Turkmen capital, Ashgabat. During the talks at the presidential palace, both sides signed a comprehensive economic cooperation agreement including oil fields, natural gas and textiles. Delegates from both countries signed the bilateral agreements during the meeting. The agreements are expected to boost economic ties between the two countries. Speaking at the meeting, Niyazov expressed satisfaction with his country's developing economic relations with China. He went on to say that the two counties had common views on issues such as international politics, humanitarian aid and UN reforms. "We attach great importance to the realisation of the natural gas pipeline construction project," he added. Niyazov invited the visiting Chinese delegation to join together with Turkmenistan in the production of hydrocarbon, polyproplene and liquefier gas on the Caspian coast. The Chinese will consider the proposals in detail. With the introduction of the pipeline project, Turkmenistan will sell 30bn cubic metres of natural gas to China annually, Interfax News Agency reported.
Meanwhile, China's CITIC Group will build new facilities and reconstruct the Maryazot mineral fertiliser plant in Turkmenistan. Recently, Niyazov allowed Turkmendokun, of which Maryazot is a part, to sign the deal that costs 265.95 million Euro, a source at the presidential press service said.
He also allowed the Construction Ministry to sign a contract with the Chinese consortium Capital Longji Sci-Tech Co. Ltd on building a glass plant in Ashgabat. The contract costs 67.38m Euro. The presidential ordinance was issued "for fully meeting the national economy's demand for mineral fertilisers and glass," the source said. Both projects will be partially financed with a 300 million Euro loan from the Export-Import Bank of China. Also Niyazov permitted the State Foreign Economic Bank to sign a general credit agreement with the Export-Import Bank of China and receive a 20-year 300 million Euro loan at three per cent annual interest.



Govt approves Caspian tourism development plan

Turkmenistan has embarked on an ambitious plan to turn its Caspian coast into a world class tourist attraction. Initially the plan was approved by Turkmen President, Saparmurat Niyazov. This project is first of the series of tourist attractions planned for the Caspian coast of Turkmenistan, reported
Total cost of the project is US$26.97m and it should be ready by February 2008. The ministry of railways would sign a contract with the Turkish company, Delta, for construction of a 12-storey health resort and tourist complex at the Avaza settlement at Turkmenbashy, the Caspian city of Turkmenistan. The tourist complex would be able to accommodate 200 guests simultaneously. There would be single accommodation as well as family units for two, three and four persons. The services would include bars, stores, fitness clubs, open and covered swimming pools, tennis courts and basketball area. Physical therapy and medical treatment facilities would also be included in the tourist complex.





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