EurasiaNet Business & Economics - New Turkmen Leader Visits Moscow and Doesn't Blink

BUSINESS & ECONOMICS

NEW TURKMEN LEADER VISITS MOSCOW AND DOESN’T BLINK
Sergei Blagov 4/24/07

Russian President Vladimir Putin tried to cajole and to charm, but he couldn’t induce Turkmenistan’s new leader, Gurbanguly Berdymukhammedov, to expand Russian-Turkmen energy cooperation.

Berdymukhammedov completed a two-day visit to Moscow on April 24. It was a trip with crucial implications for the future of the Caspian Basin energy rivalry between Russia and the United States.

Acknowledging that energy issues topped the bilateral agenda, Putin pressed Berdymukhammedov to commit to a Russian scheme that aims to frustrate a US-backed plan to build a trans-Caspian pipeline linking Turkmenistan and Azerbaijan. Construction of such a route would enable Turkmenistan, along with Kazakhstan, to avoid using Russian pipelines to export natural gas to Western markets. [For background see the Eurasia Insight archive]. A commentary published by the Kommersant business daily characterized the trans-Caspian project as a "big headache for Moscow."

Putin played up an alternative, Russian-controlled route that skirts the Caspian Sea, instead of going under it. "At your request, we quite recently launched another branch of the gas transportation system along the Caspian Sea, and today we pump over 5 million cubic meters of gas every day [along this Russian route]," Putin told Berdymukhammedov, according to a report distributed by the Itar-Tass news agency. "There exists the possibility of expanding its activities."

Berdymukhammedov appeared to listen politely to Putin’s various pitches, but did not make any firm commitments. "We’ll give this option to experts to judge," he said, referring to Russia’s alternative Caspian route. "They’ll work on it, and then we may return to it," the Itar-Tass news agency quoted Berdymukhammedov as saying.

In addition, the new Turkmen leader declined to publicly endorse a pledge made in September 2006 by his deceased predecessor, Saparmurat Niyazov, to refrain from joining any project to construct an undersea Caspian pipeline. [For background see the Eurasia Insight archive]. Berdymukhammedov likewise resisted Putin’s overture about forging stronger security ties.

A joint statement issued by the two leaders at the conclusion of the visit contained only vague references to a joint desire to "strengthen mutual trade and economic ties." Putin also "accepted with gratitude" an invitation to visit Turkmenistan.

Putin and Berdymukhamedov appeared to make no headway on Caspian Sea-related issues. Discussions on a territorial treaty concerning the sea have long been stalemated. The April 24 joint statement merely mentioned that the two leaders had discussed Caspian Sea issues, without indicating whether any progress toward the harmonization of negotiating positions had been achieved.

Throughout the two-day visit, Putin attempted to put the best possible spin on bilateral relations, which experienced several ups and downs during the last years of former Turkmen dictator Niyazov’s rule. On April 23, following a meeting at the Russian president’s Novo-Ogarevo residence, Putin asserted that economic links were developing "in the best way possible." Speaking specifically about energy cooperation, Putin said that "the results are very good, and there are good prospects for the future."

For the Kremlin, maintaining its stranglehold on Turkmen gas is vital for the country’s economic security. The government-controlled gas conglomerate, Gazprom, relies on relatively cheap Turkmen imports to keep its energy operations running. That’s because Gazprom exports much of the natural gas extracted in Russia to Western European markets. The Turkmen gas is needed to meet growing domestic demand.

In September 2006, Gazprom accepted a 50 percent price increase for Turkmen gas deliveries, paying $100 per 1,000 cubic meters. [For background see the Eurasia Insight archive]. Turkmenistan pledged to supply Gazprom with 60 billion cubic meters (bcm) of gas in 2007, 60-70 bcm in 2008 and subsequently export up to 80 bcm annually through 2028.

Turkmenistan’s ability to meet its export commitment to Russia, as well as another one to China, has been a matter of debate; fulfilling all its pledges would require Ashgabat to double its current level of gas production. [For background see the Eurasia Insight archive]. In 2006, Turkmenistan funneled 41 bcm of gas via Russian pipelines, and Ashgabat pledged to supply Gazprom at $100/tcm till 2009.

Turkmenistan currently depends on a pipeline network, known as Central Asia-Center, to ship gas to Russia. That network, however, has a current capacity of 50 bcm per year.

Apart from gas supplies, trade between Russia and Turkmenistan has been generally stagnant, with bilateral trade turnover reaching $308 million in 2006, up just about 2 percent over the previous year. Russian executives used the opportunity of Berdymukhammedov’s arrival in Moscow to explore new trade and investment opportunities.

Russian commentators, perhaps taking a cue from the Kremlin, were generally upbeat about the visit. "Today it’s already clear: Russia and Turkmenistan are striving to pick up the pace of cooperation," said a commentary published by the Krasnaya Zvezda newspaper.

Editor�s Note: Sergei Blagov is a Moscow-based specialist in CIS political affairs.

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