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Russia gains big in Central Asian gas
game
By Sergei Blagov
MOSCOW
- Moscow has achieved a breakthrough in outplaying the
trans-Afghan pipeline plan by bringing virtually all of
Turkmenistan's gas into its sphere of influence. On
Gurbansoltan 10 (April, according to the Turkmen
calendar), the President of Turkmenistan, Saparmurad
Niyazov, traveled to Moscow and clinched a major gas
deal.
The Turkmen leader signed a framework
agreement on gas cooperation with Russian President
Vladimir Putin. Moreover, Turkmenbashi, as he is known,
obviously did not mind a protocol discrepancy and
personally inked a 25-year contract on gas supplies to
Russia with Alexey Miller, the head of the Russian
natural gas monopoly Gazprom. Speaking at the signing
ceremony at the Kremlin, Niyazov guaranteed "reliable
gas supplies" to Russia.
Miller said that Russia
hopes to raise imports of Turkmen gas to 10 billion
cubic meters by 2006 and to 80 billion cubic meters by
2009 with a total of 2 trillion cubic meters in 25
years. He said that Gazprom will pay $44 per 1,000 cubic
meters (tcm) in the first three years - more than the
$32 per 1,000 cubic meters Miller's predecessor Rem
Vyakhirev offered five years ago. Part will be paid in
cash and part in Russian goods.
Turkmenbashi
claimed that the deal will bring Turkmenistan $200
billion. Putin said that Russia would pay Turkmenistan
50 percent of the payment in barter (supplies of Russian
energy equipment) and 50 percent in cash.
Miller, who traveled to Ashgabat earlier this
month to finalize details, described the deal as a
"revolutionary breakthrough in the strategic partnership
between the two great gas states".
Russia has
long been interested in Turkmen hydrocarbon resources.
Turkmenistan's gas is important to Moscow because
Russian natural gas monopoly Gazprom needs gas to make
up for the shortages created by its export commitments
to Europe and lack of domestic investment. Gazprom's
annual shortfall in supplying the Russian domestic
market has been estimated at 30-40 billion cubic meters
(bcm).
Turkmenistan has the world's
third-largest natural gas reserves - 22.5 trillion cubic
meters, according to Niyazov - but current exports are
almost exclusively directed at former Soviet states
supplied via pipelines owned by Russia. In 1991,
Turkmenistan produced nearly 85 bcm, but the output
plunged to only 13.2 bcm in 1998 and 23 bcm in 1999. In
2002 Turkmenistan pumped 53 bcm of gas, thus achieving 3
percent growth over 2001. In 2002, gas exports reached
41 bcm, while the rest was consumed domestically.
However, in recent years relations "between the
two great gas states" have been overshadowed by
countless disagreements. In 1997, Turkmenistan suspended
deliveries to Russia in a price dispute, insisting that
$32 per 1,000 tcm was too low. In December 1999,
Russia's Gazprom offered 70 percent of the payment in
barter and 30 percent in cash. Turkmenistan insisted on
$40-42 per tcm with 50 percent payment in cash and a
compromise was reached at $36 per tcm with 40 percent in
cash.
According to a December 1999 agreement,
Turkmenistan was supposed to export 20 bcm in 2000 and
increase this figure by 10 bcm per year for three to
four years until import levels reach 50-60 bcm per year.
So far, this deal has failed to be fully implemented.
Now the bulk of Turkmen gas is being exported to
Ukraine and Russia via Russian pipelines, while some gas
exports go to Iran. Turkmenistan and Iran have had price
disagreements and Turkmenistan's recent gas supplies to
Iran of around 2 bcm per year, below the agreed 5 bcm,
although Iranians reportedly pledged to purchase up to
11 bcm a year.
However, in the wake of the
recent Trans-Afghanistan pipeline deal, Turkmenistan's
dependence on Russian pipelines was supposed to change.
On December 27 last year, Niyazov, Afghan President
Hamid Karzai and Pakistani Prime Minister Zafarullah
Khan Jamali met in Ashgabat and signed an agreement to
build a 1,400 kilometer pipeline that would carry
natural gas from Turkmenistan to Pakistan. The $2.5
billion pipeline, which would carry gas from the
Dauletabad gas field near the Iranian border, could also
be extended to India.
Incidentally, Gazprom has
been eyeing Dauletabad to carry 20 bcm per year for
Pakistani markets. But as Dauletabad is still hooked up
to the old Soviet pipeline network, Gazprom still can
take gas from there into Russia.
No big wonder
that Russian officials rushed to clinch a gas deal with
Turkmenbashi. Last January, Russia submitted a draft of
bilateral energy deal to Turkmen officials. Basically,
Moscow suggested Turkmenistan to export 10 bcm of gas to
Russia by 2005 and 20 billion by 2008.
Obviously, the April 10 agreement will provide
Moscow with a lot more gas than it previously expected.
Turkmenbashi also got a better deal in terms of price,
compared to the December 1999 agreement. However, since
Moscow basically convinced Turkmenistan to sell all its
export gas to Russia, the economic viability of the
trans-Afghanistan gas pipeline suddenly becomes a matter
of debate.
Apart from the price trade-off,
Moscow arguably has made a number of political
concessions in order to secure the important gas deal.
For instance, last January, Russia publicly agreed with
claims by Niyazov that alleged assassination and coup
attempts against him last November were part of
international terrorism. Therefore, Moscow distanced
itself from a point of view that Niyazov had staged the
assassination attempt as a pretext to crack down on
opponents, reminiscent of Stalin-era purges in the
Soviet Union.
Moreover, Russian officials also
promised to help Turkmen authorities to investigate the
assassination attempt and apprehend suspected plotters.
In response for cooperation with Ashgabat, Russia sought
the increased gas purchases from Turkmenistan.
In the wake of the alleged coup attempt,
Turkmenbashi has repeatedly hinted that Russia was
implicated in the attempt to topple him. Niyazov's
motorcade reportedly came under machine gun fire in
downtown Ashgabat on November 25. So far, there has been
no independent confirmation of the official version of
the attempt.
Niyazov said that he had asked
Putin's help in locating and extraditing two of the
alleged conspirators - ex-central bank chief Khudaiberdi
Orazov and former ambassador to Turkey Nurmukhammed
Khanamov - who are still at large. So far, the Russian
authorities have refrained from detaining any members of
anti-Niyazov opposition in Russia. However, in January,
the Russian General Prosecutor's Office launched a probe
into alleged involvement of the Russian Depositary Bank
in the embezzlement of $20 million form Turkmen state
coffers.
On April 10, Putin and Niyazov also
agreed to cancel a dual citizenship agreement, which is
no longer needed, according to Putin. Since earlier this
year Turkmen officials have insisted on ditching this
agreement, presumably to make it more difficult for
exiled Turkmen officials to settle in Russia.
In
an attempt to limit exchanges with the outside world,
Niyazov reinstated exit visas beginning March 1. A Cold
War Era relic, exit visas were required for travel
abroad in the Soviet Union, and were used to restrict
emigration and monitor citizens' overseas activities.
The methods the Turkmen government has used to
investigate the alleged assassination attempt have drawn
Western criticism. The Organization for Security and
Cooperation in Europe has compared televised confessions
by alleged coup plotters to Josef Stalin's Soviet show
trials of the 1930s. The European Union issued a
statement criticizing the detention of numerous
relatives of the alleged instigators of the attack.
However, Niyazov's reprisals against opponents and moves
to restore an iron curtain around his already isolated
country drew no Russian reaction.
Moreover, on
April 10, Putin and Niyazov also signed an agreement on
security cooperation, designed to "settle regional
conflicts and crisis situations". According to the
agreement, "special services" of Russia and Turkmenistan
will boost cooperation "to combat international
terrorism", including extradition of suspected
militants.
It is understood that by clinching a
25-year gas deal with Russia, Turkmenbashi probably
intended to make Moscow more interested in the security
and long-term viability of Niyazov's regime.
Turkmenbashi, who likes to live in lavish palaces and
build huge statues of himself, presumably would not mind
to have an extra security arrangement against an
unexpected change of his regime.
(©2003 Asia
Times Online Co, Ltd. All rights reserved. Please
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