Business & Economics:
RUSSIA CELEBRATES ITS CENTRAL ASIAN ENERGY COUP
Sergei Blagov: 5/16/07

Russian officials and experts can barely conceal their glee over the signing of pacts that give the Kremlin a seemingly unbreakable stranglehold over Central Asia’s energy resources.

The main deal, forged May 12 in the Turkmen city of Turkmenbashi, would upgrade the Prikaspiiski natural gas pipeline that skirts the Caspian shoreline, enabling Russia to virtually corner Turkmenistan’s gas exports. [For background see the Eurasia Insight archive]. Western experts generally view the deal to be a disaster for US and European Union energy plans in the Caspian Basin, in particular the construction of trans-Caspian pipelines to tap into Central Asia’s oil and gas reserves. These pipelines would enable Central Asian exporters to circumvent Russian-controlled routes. [For background see the Eurasia Insight archive].

After the signing of the preliminary agreement, various Russian media outlets quoted an unnamed Kremlin official as saying the May 12 trilateral summit – bringing together Russian leader Vladimir Putin, Turkmen boss Gurbanguly Berdymukhammedov and Kazakhstani President Nursultan Nazarbayev – had “exceeded expectations.” In addition to the Prikaspiisky deal, the three states, along with Uzbekistan, agreed to refurbish two additional natural gas pipelines. When all the works are completed, Russia stands to almost double its imports of Central Asian gas to roughly 90 billion cubic meters (bcm), up from the present level of about 50 bcm. To demonstrate their commitment to the project, both Turkmenistan and Kazakhstan agreed to finance construction of their respective portions of the pipeline without Russian assistance, Russian-language media outlets reported.

Putin on May 14 ordered his Kremlin underlings into action, demanding that immediate follow-up action be taken. “This work [the May 12 accord] is very important for our ties with the Central Asian region,” Putin was quoted as saying at a cabinet meeting. Specifically, Putin ordered feasibility studies for new ferry and rail links between Russia and Central Asian states. At the summit, Berdymukhammedov expressed a keen desire to develop such links.

Many observers in Moscow now believe, with the emergence of the Prikaspiisky option, the bell is tolling for the US-backed trans-Caspian pipeline (TCP) project. The fact that Russia appears to have outmaneuvered the United States in the contest over Turkmenistan’s resources is no small source of satisfaction inside Moscow’s Ring Road.

"These results are especially valuable, because they were achieved with a backdrop of a strong opposition from the West," said Andrei Kokoshin, who heads the Russian Duma’s Committee on CIS Affairs.

Russian policy planners make no secret of wanting to use the Prikaspiisky deal to achieve several immediate objectives; to deliver a coup de grace against the TCP project; to block the efforts of Russia’s antagonists to create alternative energy-supply routes that the Kremlin can’t control; and to place the EU in an energy-supply vice.

A Russian-EU energy summit is scheduled to take place in the Volga River city of Samara on May 17-18. EU officials have voiced a desire to diversify the group’s sources of energy. The recent deals, however, would appear to deprive the EU of negotiating leverage.

The Prikaspiisky pact also appears to have dashed the dreams of several formerly Communist countries in Central Europe – including Poland, Lithuania and Ukraine – of breaking their energy dependence on Russia. Representatives of those states, along with Georgian and Azerbaijani leaders, gathered for a meeting in Krakow, Poland, on May 11, during which they discussed ways to gain access to Caspian Basin energy without it having to cross Russian territory.

Attempts to build alternative routes that avoid Russia will now just be “a waste of money,” said Igor Pushkarev, a member of Russia’s Federation Council, referring to the Krakow meeting, which ended early after news of the Prikaspiisky pact spread.

Other observers were far blunter in their assessment. A commentary appearing on the Newsinfo.ru website derided Russia’s opponents in the Caspian Energy game: “The US Department of State tried to use its twerps from the former Soviet bloc – Poland, Lithuania, and other political dwarfs – to bring pressure upon Moscow. The key point in the struggle for energy markets was the Krakow summit. … But the summit failed in a most disgraceful manner for Russophobes.”

While confident that the Prikaspiiski pact will effectively preclude TCP from ever becoming a serious threat to Russia’s energy hegemony, most Moscow officials are reluctant to proclaim a total victory on this front. That’s because Berdymukhammedov said May 12 that Turkmenistan retained interest in TCP.

That Berdymukhammedov made such a clear commitment to deepening energy cooperation with Russia took many Western observers by surprise. The Turkmen leader’s position perhaps comes into clearer focus when considering that just a few days after the announcement of the Prikaspiisky deal, Berdymukhammedov purged Turkmenistan’s security supremo, Akmurat Rejepov. The sacking stands to significantly enhance the new president’s domestic political position. It’s unlikely that Berdymukhammedov would have moved against such a potent political rival unless he was absolutely sure he had the political muscle to succeed. It may well be that Putin provided such assurances of political support.

Russia is also moving assertively to lock up Central Asian oil supplies. Russia and Kazakhstan have announced an intention to expand the Caspian Pipeline Consortium route, up from its present capacity of 23 million tons annually to 40 million tons. Kazakhstan also agreed to supply up to 17 million tons of oil per year for a Russian-controlled 280-kilometer pipeline that is envisioned to run from Bulgaria's Black Sea port of Burgas to Alexandroupolis in Greece.

Following May 10 talks in Astana, Nazarbayev told reporters that his country "was absolutely committed to funneling the bulk of our hydrocarbons, if not all, via Russia's territory."

"Last year, we shipped 52.2 million tons of Kazakhstani oil, of which 42 million tons funneled via Russia," Nazarbayev said.

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