EurasiaNet Eurasia Insight - Turkmenistan Needs to Balance Energy Ddevelopment Desires With Environmental Risks

EURASIA INSIGHT

TURKMENISTAN NEEDS TO BALANCE ENERGY DEVELOPMENT DESIRES WITH ENVIRONMENTAL RISKS - WATCHDOG GROUP
9/13/07

Efforts to develop Turkmenistan’s abundant energy resources can imperil the country’s delicate environmental balance, a prominent watchdog group is cautioning.

With Western conglomerates now lining up to enter Turkmenistan’s lucrative energy market, it is important that the potential ecological risks associated with development are fully understood, said Kate Watters, the director of Crude Accountability, a non-profit group that monitors energy-related issues in the Caspian Basin. Watters was a featured speaker at a September 12 discussion group, held at the Open Society Institute’s office in Washington, DC.

A report prepared by Crude Accountability, titled Turkmenistan’s Environmental Risks in the Era of Investment in the Hydrocarbon Sector, outlines the major ecological challenges in Turkmenistan and makes recommendations on how they should be addressed. The report, released September 12, suggests that increased energy-related activity in Turkmenistan can easily increase the stress on the local environment, in particular Caspian coastal areas where much of the country’s energy development is occurring.

Until recently, Turkmenistan was among the most isolated countries in the world. [For background see the Eurasia Insight archive]. With the death of former dictator Saparmurat Niyazov in 2006, followed by the rise to power of incumbent President Gurbanguly Berdymukhamedov, Turkmenistan has become more open to foreign investment. [For background see the Eurasia Insight archive].

According to the report, Western oil companies are now eager to seize on the opening. "Turkmenistan represents the �last frontier’ of hydrocarbon investments" in the Caspian Basin, the report states.

Leo Gallagher, the US State Department’s Regional Economic Officer for South and Central Asia, and another featured speaker at the September 12 discussion, said Western energy companies can act as an engine for growth and prosperity in Turkmenistan, where a majority of the population lives in rural areas, in impoverished conditions. [For background see the Eurasia Insight archive]. "Energy development is a net plus in terms of creating employment," Gallagher stated.

At the same time, Gallagher acknowledged that unregulated development posed collateral hazards. He argued that the presence of big Western conglomerates, such as British Petroleum, would increase the odds that ecological concerns would be taken into account. "They [Western conglomerates] use best practices," he said.

If future energy investment is not well-regulated, the environmental impact on Turkmenistan could be disastrous, the report indicated. "In total, 273 species of fauna and 110 species of flora are �rare and vanishing’" in the Caspian Basin, the report stated. A significant spill or other type of mishap could push some of these endangered species over the edge toward extinction.

Energy development poses a particular risk to the Krasovodsk Nature Reserve, the report said. It added that three types of Caspian sturgeon � Beluga, Stellate and Russian � would be especially vulnerable to any environmental crisis. These sturgeon, the source of some of the world’s most coveted caviar, already are facing pressure from "polluted water" and "over-fishing," the report stated. For example, the population of Stellate sturgeon today is estimated to be only 10 percent of 1978 levels. The point is fast approaching where it may be too late to save some Sturgeon types.

"Environmental experts within the Caspian region and around the world agree that without constant, comprehensive protection, the Beluga may be extinct within the next two decades," the report said.

Increased oil exploration and extraction activities in the Turkmen sector of the Caspian Sea also could heighten the pressure on the Caspian Seal and kilka, which the report described as "an inexpensive and popularly consumed fish."

To keep environmental risks posed by energy development to a minimum, the report called on international financial institutions, or IFIs, to condition cooperation with the Turkmen government on its adherence to "basic environmental, human rights and other international conventions and agreements." Crude Accountability also urged IFIs to require the Turkmen government to conduct strategic environmental assessments, or SEAs, in order to qualify for development aid.

"Part of the problem with past IFI investments is that they have been treated as isolated projects, rather than as part of an overall development scheme," the Crude Accountability report stated. As a result, earlier Caspian Basin energy projects, in particular the Baku-Tbilisi-Ceyhan, did not undergo an SEA, according to the report.

Crude Accountability also called on energy companies to avoid undertaking the "exploration, extraction and transport of hydrocarbons" in protected areas, and to make the terms of production sharing agreements, or PSAs, public.

"Companies should ensure that Environmental Impact Assessments are conducted properly and in compliance not only with national legislation, but also with the highest international standards," the report added. At the September 12 discussion, Watters expressed concern that international oil & gas entities are already drilling in some Caspian Basin wildlife sanctuaries.

The Central Eurasia Project aims, through its website, meetings, papers, and grants, to foster a more informed debate about the social, political and economic developments of the Caucasus and Central Asia. It is a program of the Open Society Institute-New York. The Open Society Institute-New York is a private operating and grantmaking foundation that promotes the development of open societies around the world by supporting educational, social, and legal reform, and by encouraging alternative approaches to complex and controversial issues.

The views expressed in this publication do not necessarily represent the position of the Open Society Institute and are the sole responsibility of the author or authors.