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TURKMENISTAN


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
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)

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Update No: 329 - (01/06/08)

After the Turkmenbashi
There is no doubt that the new leader of Turkmenistan is a big improvement on his predecessor, Saparmurat Niyazov, a megalomaniac dictator, who justified the extravagance of his personality by copying Stalin in making a cult of personality to personify his new sovereign state of Turkmenistan. This because of the need to keep the traditionally turbulent nomadic tribes of the country together, who prior to the Russian imperial invasion of their sprawling territories, had acknowledged no overlord. 

There was more than a grain of truth in this. At least Turkmenistan avoided the post-Soviet wars of the Caucasus or Central Asia. But it was at a heavy price of being locked into backwardness, isolation and subservience to Russia, once Western majors concluded that working with the headstrong and temperamental Niyazov, was impossible.

President Gurbanguly Berdymukhammedov is opening his country to the outer world, albeit more southwards and eastwards than westwards yet. He is forging links with other energy-producing countries and new customers and investors, India, Pakistan, China and South Korea to the fore, while exploring the possibility of new supply routes westwards for gas. For gas is overwhelmingly what Turkmenistan has to sell, with oil as a sideline.

Gas OPEC summit in Tehran
A most fortunate development here came on April 28. Experts from the Gas Exporting Countries Forum (GECF), including Turkmenistan, met in Tehran to discuss the charter of the new so-called 'gas OPEC.' This is an old idea, dusted down by Putin as a flourish at the end of his presidency. 

GECF energy ministers are expected to finalize the latter's formation this summer in Moscow. Initially another summit was to be held in June, but there is talk of a delay because Qatar and Venezuela are not yet convinced. In the event that this cartel is formed, it may seriously change the situation on the global gas market, giving Turkmenistan a far more prominent role than hitherto.

However, gas is sold under fixed long-term contracts, unlike oil. There is no spot market for gas, although there is for liquefied gas, very much a ‘coming’ fuel. A lot of new thinking would be required to make the 'gas OPEC' a reality.

The Afghan route is now deemed on by some, but not all
In a brave development in late April, Pakistan, Turkmenistan, Afghanistan and India signed a framework agreement to build a Trans-Afghan - Pakistan Pipeline (TAPI) by 2015. This news once again shows that energy security and the high demand for Central Asian hydrocarbons continue to be at the top of the global agenda. 
With a projected capacity of over 30 billion cubic metres of gas per year and a length of 1,680 kilometres, the TAP project would cost almost $8 billion. As before, Russian experts are doubtful about this project's success for a whole number of economic, technical and above all geopolitical reasons. 
After all Afghanistan is not exactly a safe route for anyone or anything. Tapping into energy pipelines would be just up the Taleban's street - or Al-Qaeda's for that matter. The pipeline's Afghan leg will be 830 km long. Military tensions in Afghanistan may thwart its construction -there is usually a war going on in that country.

Pakistani-Indian relations are not trouble-free either
The pipeline is supposed to be fed with gas from the Dovletabad deposit in Turkmenistan, but those resources have not yet been proven. It is also not clear how much gas altogether can be produced by Turkmenistan. Its gas resources are variously estimated at between 8 and 20 trillion cubic metres (But BP puts them at a mere 2.9 trillion cubic metres). So this question of the size of the reserve is paramount.

In 2007, Turkmenistan produced about 70 billion cubic metres of gas. As of today, it has contractual commitments to Russia's Gazprom and Iran for all of its gas. Russia is planning to buy 80-90 billion cubic metres from it per year until 2028. Moreover, Turkmenistan has signed a framework agreement to supply China with 30 billion cubic metres of gas starting next year, and India a similar amount if a pipeline can be built.

It is abundantly clear that the TAPI is primarily a political project for Turkmenistan. It will gain from this project, even if it is never carried out. The framework agreement is supposed to show that Turkmenistan has lots of options and may bargain with its best clients. It puts it on the map as a global player.

The TAPI is the fourth or fifth project of the Turkmen government. All in all, its gas pipeline plans are estimated at an annual throughput of over 200 billion cubic metres, which is three times higher than the current production level. It may all end in tears by simply not having enough gas. 

There are other difficulties as well. Afghanistan's geological conditions and those of Pakistan, may be unfit for the pipeline. Afghanistan also has no railways, which complicates the project and increases its costs, because trucks will have to bring the pipes from Turkmenistan and Pakistan by road. 

Turkmenistan faces tough competition. India is pleased to also be a partner in the Iran-Pakistan-India (IPI) gas pipeline project, which is considered by some, (including the US government very much opposed to this doing business with Iran) as an alternative to TAPI. 

A gas pipeline from Iran to Pakistan and India with a price tag of $4.1 billion and a length of 2,700 km is supposed to be being built next year. Starting in 2010, India and Pakistan expect to receive 35 billion cubic metres of gas per year, and twice as much in 2015. 

Of course the two projects are not necessarily exclusive - India and Pakistan need more gas than they can produce and India in particular is growing at such a rate, that it would welcome both sources of supply. 

Gazprom as the commercial arm of an energy superpower, is very enthusiastic about IPI, and is even eager to invest in it in exchange for a share in the consortium, liking to divert Iranian product eastwards away from Europe. 

Experts working in Tehran to finalize the future gas OPEC's charter composed it from two documents prepared in Moscow and Tehran. Iran wants to involve Gazprom in its hydrocarbon projects as much as possible, because it wants to set up a serious organization of gas exporters, with Turkmenistan also to the fore. Considering that American sanctions are making it difficult for Iran to attract Western investment, Tehran is also trying to get partners and political allies in the diplomatic war with the West, a part of which is the formation of the gas OPEC. 

To sum up, for the time being the TAPI is no threat to Russia's gas interests – and may for the reasons given, never happen. Moreover, Moscow's active involvement as an investor in piping gas supplies to South Asian countries, may bring it more dividends and enhance its position as a leading gas exporter, which is also true of Ashgabad. The Turkmen perhaps have a penchant for fellow Asiatics (see below), who do not engage in the suggestion of condescension and hauteur of Westerners. 

South Korea a key potential partner
Turkmenistan wants to work with South Korea to develop its oil fields, and promised to give more opportunities to Korean firms to participate in its energy development projects, Prime Minister Han Seung-soo said May 21. ``Turkmenistan's President Gurbanguly Berdymukhammedov told me that he is eager to partner with Korean firms to develop three big oil fields at sea,'' Han told reporters in Seoul. ``He also expressed the intention of opening the door for Korean firms for the development of gas and oil on land.''

He made the comments one day after he returned from a 10-day trip to Uzbekistan, Kazakhstan, Turkmenistan and Azerbaijan, where he met heads of state and ranking officials to discuss ways of promoting economic cooperation. 

Han said he had a one-to-one meeting with the Turkmenistan president for some 70 minutes. Many major oil firms have requested permission to participate in oil development projects in Turkmenistan, but he has rejected the offers. Berdymukhammedov said he prefers South Korea as a partner, Han said.

"The Turkmen president said he wants to strengthen cooperation with the Korean government for energy development. I delivered such message to President Lee Myung-bak on May 20,'' Han said.

Turkmenistan has a total of 32 undeveloped oil fields. Berdymukhammedov promised to "give'' three good ones to Korean firms, Han quoted the president as saying. "Turkmenistan hopes it will get more help from South Korea for its economic development. Berdymukhammedov pledged to develop bilateral relations,'' Han said.

Many Korean oil developers, including Korea Land Corp., SKC&C, Daewoo International and Korea National Oil Corp., accompanied the prime minister on his trip to the Central Asian nations.
 

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