Turkmenbashi's gas games: gas for power?

James Purcell Smith

For the last 10 years, President of Turkmenistan Saparmurad Niyazov became famous, among other extraordinary actions, by the announcement of a number of gas pipeline projects in every possible direction, which never materialized. After being subdued to Russian dominance because of a foreign-orchestrated assassination attempt, the Turkmen president came up with another pipeline project: Turkmenistan-Kazakhstan-Russia, in addition to already existing and operating 5 pipelines in the Northern direction. This raises questions as to the implications for Turkmenistan, but also regarding the developing international environment in Central Asia.

BACKGROUND: Since the early years of its independence, Turkmenistan's President Saparmurad Niyazov has been coming up with a number of gas pipeline projects, with the aim to boost its gas exports bypassing the Northern route through Russia. The Turkmen president spent days and weeks of talks with heads of states and other officials, discussing numerous gas pipeline projects. A shortlist includes the Turkmenistan-Iran-Turkey option, the Turkmenistan-Uzbekistan-Kazakhstan-China-Japan, the Trans-Caspian Turkmenistan-Azerbaijan-Georgia-Turkey, and the last, widely discussed project, Turkmenistan-Afghanistan-Pakistan with possible extension to India. What Turkmen authorities succeeded to accomplish in this time is the construction of a single, 140 km (90 miles) long gas pipeline from Korpedzhe in southern Turkmenistan to Kurtkui in northern Iran with exports of ca. 4-5 billion cubic meters to Iran annually starting in 1998.

However, all other projects still remain at the stage of wishful thinking. According to most experts, the main reason is the unrealistic demands on the part of Turkmen authorities to the parties in the projects and the erratic behavior of the Turkmen president. During the 10 years since 1993, Russia succeeded in building the Blue Stream gas pipeline from southern Russia though the Black Sea to Turkey with an annual capacity of 16 billion cubic meters of gas. Iran completed a gas pipeline from Iran to Turkey and has been exporting gas to Turkey for the last two years. According to the agreement signed between Turkey and Iran, Tehran is intending to export more than 520 billon cubic meters of gas to its western neighbor during the upcoming twenty year period. And in this situation, Turkmen authorities are announcing another gas pipeline project Turkmenistan-Kazakhstan-Russia, after the strange and by all assessments foreign-orchestrated assassination attempt on Mr. Niyazov on November 25, 2002. The length of the pipeline is expected to be 1070 kilometers (670 miles) with a capacity of 30-40 billion cubic meters annually, and at a cost of over US$1.2 billion.

It is necessary to consider that since the mid-1970s until the present, five different strategic gas pipeline go to Russia from Central Asia, carrying mainly Turkmen gas as well as small volumes of Uzbek gas to its customers in Russia, the Ukraine, and partly to Georgia and Armenia.

IMPLICATIONS: Many experts have now been raisings questions regarding the real motivations behind and the implications of another gas pipeline project to Russia from Turkmenistan. Is it a another dead-end pipe-dream of the ailing Turkmen president, or the ultimate prize of Turkmenistan's submission to foreign interests and another tool in a New Old Great Game? Experts believe that the volume of pipelines currently in operation, after minor repairs, can afford pumping almost 60 billion cubic meters of Turkmen and Uzbek gas via the northern route to Russia and the Ukraine. Turkmen gas is currently exported to Russia and the Ukraine at a price of $42 per 1000 cubic meters, half of which is paid in currency, and half by highly overpriced commodities unmarketable on the international market. Ashgabat is also exporting another 5 billion cubic meters of gas to Iran, and the domestic consumption of Turkmenistan accounts for another 15 billion cubic meters. Altogether, this totals 80 billion cubic meters of gas annually. Western experts in the oil and gas industry of Central Asia believe that the aforementioned volume of gas extraction is close to the limit of the Turkmen gas industry's capacity. To extract an additional 30-40 billion cubic of gas, the Turkmen gas industry will require $4-6 billion in investments. And with such figures, building another pipeline under these circumstances means a merely geopolitical investment, aimed at totally abolishing the hopes of all other customers to buy Turkmen gas in the foreseeable future.

Evidence to this effect were clear during Niyazov's recent trip to Moscow in April 2003. Mr. Niyazov signed a 25-year gas deal with Russia to export up to 2 trillion cubic meters of natural gas until 2028, at a price of $44 per 1000 cubic meters, at the same conditions: 50% in cash, 50% in commodities. Given the current level of world gas prices at more than double what Turkmenistan will receive, the conclusion that comes to mind is not flattering: this was the ultimate prize that Mr. Niyazov was willing to pay to his masters for keeping himself in power in his desert country ravaged by mismanagement and the cult of personality. However, a dimension that Mr. Niyazov may not have grasped is that this also means nobody in either the East or West any longer believe that he and his country is an independent political actor in the international arena. Clearly, this creates the risk that foreign actors will discuss important matters not with Turkmenistan but with his masters abroad.

CONCLUSION: The recent events in Turkmenistan and the new geopolitical equilibrium that this creates is clearly important to the West, and especially the United States. The U.S. claims its policy in Central Asia is not that of a "zero sum game" or a new round of the Old Great Game. However, it is faced by behavior by other regional powers that is reminiscent of just this type of politics. At present, other international actors in Central Asia do not seem to share and respect the principles of international conduct in Central Asia and behave accordingly. The challenge this creates for U.S. thinking on the region is apparent. A failure to address this urgent challenge to regional stability and security will only increase the risk of new political adventures and undermine the shaky status quo of mutual political tolerance and stability in inter-state relations among countries of Central Asia. On another level, these recent development may have been intended to - and may contribute to - decreasing the opportunities and possibilities for regional cooperation between Central and South Asia, that emerged with the fall of the Taliban in Afghanistan and the defeat of international terrorism in that country.

AUTHOR'S BIO: James Purcell Smith is an expert on Russian and Eurasian Affairs, based in New York.

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