|
ASHGABAT’S ENERGY POLICY
ADZHAR KURTOV,
Expert, Russian Institute for Strategic Studies, Moscow
Speaking about the energy policy followed by the Turkmen authority, it is necessary to realize that in terms of its location Turkmenistan is a unique state. It is located in the south of the former USSR bordering upon Afghanistan and Iran.
This left its imprint on the economic policy pursued by the Soviet Union in Turkmenistan. The “Iron Curtain” was established there too, and as at that time Iran was influenced by Great Britain and, later on, by the USA, the Soviet Union maintained no relations with Iran. That’s why there was neither infrastructure nor mutual trade between the two countries.
The Soviet Union exported its energy resources to Europe. So, the Turkmen gas was supplied via Uzbekistan and Kazakhstan to Russia and then to the West. The other export routes were not developed.
So t is understandable why after Turkmenistan had become independent, that policy came to be viewed as colonial. One can doubt that it is fair, because Turkmenistan was one of the least developed republics even in the Soviet Union. The Turkmen industry was developed on the Soviet Union’s money including the incomes from the Turkmen gas sale.
Turkmenistan would fail to construct the pipelines by itself. This is true even now. Turkmenistan has laid not a single gas pipeline on its own for 17 years of its independence.
True, since the incomes from the Turkmen gas sale went to the Soviet Union budget, Russia and Turkmenistan have not completely improved their relations yet. Ashgabat believes that Russia did not pay off its many-million debt.
The situation changed after the fall of the Soviet Union. Moscow took a firm stand. The point is that Russia could acquire the currency only exporting its oil and gas to the Western countries.
So, Russia was exporting its gas to Europe and tried to force Turkmenistan to export the Turkmen gas to those CIS countries that could not pay hard cash for it. It comes natural, that Turkmenistan did not consider such a policy to be honest. Georgia, Ukraine and Azerbaijan had great debts.
Then the situation had started to improve with some help from the Russian companies. But in 1997-1998 because of its unwillingness to increase the purchase prices, Turkmenistan had to cut down the gas export in 13 times, thus bringing it virtually to naught.
And this problem was also solved, in many respects, thanks to Russia. Russia increased the prices. For the recent three years, the price had skyrocketed from $44 to $100 per a cubic meter, which is a high price. After that Turkmenistan charged other buyers, including Iran, with that price.
But in spite of the purchase price increase Turkmenistan failed to reach the production level of the Soviet era. For the time being about 70 billion cubic meters is produced, while in the Soviet Union this figure was over 80 billion cubic meters. In Turkmenistan itself little gas is consumed. It means that Turkmenistan has considerable export reserves.
About 10 million tons of oil are produced in Turkmenistan, which is not much. Almost all that oil goes to two oil-processing plants whose products are exported with greater profit.
In 2003 Russia concluded with Turkmenistan an agreement on gas supplies for 30 years. According to the agreement the production is to increase annually and make 90 billion cubic meters per year. For the time being the amount of oil produced falls slightly short of the target.
In a large measure, it is connected with the fact that Turkmenistan unwillingly allows the Russian companies to modernize its pipelines constructed as far back as in the Soviet period. The pipelines capacity is about 50 billion cubic meters.
As regards the total gas reserves, the latest reliable calculations were performed in the late eighties. According to this data, Turkmenistan has about 3 trillion cubic meters reserves. Recently new deposits have been discovered and now the Turkmen authorities mention the figures from 23 to 33 trillion.
This calculation may be wrong. Firstly, it is doubtful that since the eighties the reserves would have grown 10 times. Secondly, Turkmenistan does not allow independent assessors in. An exception was made for the USA when the Transafghan project was being considered. However, this data was not published.
Thus, one can suppose that the authorities are bluffing. But it is also quite possible that Turkmenistan deliberately conceals the reserves to have the last word after having obtained investment in the pipelines construction.
As to China’s role, for the recent three years it has been increasing its economic presence in the whole Central Asia. Turkmenistan is of particular importance to China. It is the only Central Asian country that does not belong to the SCO (Shanghai Cooperation Organization). In 1995 Turkmenistan announced its neutrality, it will not join the organization with supranational regulatory authorities.
As a country with a high level of the state interference with the economy, China can grant credits at much lower rates of interest. This is of interest to all the Central Asian countries including Turkmenistan.
The trade between these two countries is growing. China is supplying many industrial products with high added value. But it is interested mainly in the natural resources.
The Chinese geologists have been looking for deposits on the right bank of the Amu Darya River for about 10 years. In April 2006 the agreement was signed on supplying the gas from the discovered deposits to China. However, it is not clear where the pipeline will be laid. China took an ambivalent stand. The pipeline is most likely to pass through Uzbekistan and Kazakhstan.
Turkmenistan has undertaken to fill the pipeline. It means that if the gas is not enough, it will be taken from other deposits, from which the gas is supplied via the Central Asia-Center pipeline to Russia. It is significant that last year Turkmenistan did not extend the long-term contract with Ukraine. Should there be lack of gas, the gas intended for Ukraine will be supplied to China.
Anyway, Turkmenistan will have to increase its gas production up to the Soviet period level. For the present it is not reached.
This spring Russia, Kazakhstan and Turkmenistan concluded the tripartite agreement on the construction of the Transcaspian gas pipeline.
That way, it is clear that the struggle for Turkmenistan’s energy resources is being waged. Here Russia has obvious advantages. Firstly, Central Asian states regard China as a different civilization. Secondly, the price factor counts. Russia buys gas at a quite high price. In this respect China is stingy. In the last April agreement China speaks about a fair price, but does not mention any concrete figures.
China always tries to purchase the energy resources at the lowest possible prices. Now Russia buys gas at $ 100 and is ready to make concessions. Ashgabat realizes that and, probably, it will delay the negotiations with China in order to get more concrete price commitments. Apart from that, there are other stakeholders - the USA, Turkey and Iran - that also have an eye on Turkmen gas and are unlikely to maintain the agreements with China.
July 19, 2007
|
