Turkmenistan: Still an Independent Energy Player in Central Asia

Turkmenistan continues to be a wild card in Central Asia's contest over natural resources and export routes, a fact that casts doubt on Russia's ability to implement its grand energy plan for the region.

Ashgabat has long had a reputation for fickle behavior in energy matters – an image mainly fostered by former dictator Saparmurat Niyazov's penchant for unpredictable behavior. [For background see the Eurasia Insight archive]. Niyazov signed a landmark natural gas deal with Russia in 2003, but in ensuing years he caused consternation in the Kremlin with demands to renegotiate the price. [For background see the Eurasia Insight archive].

Following Niyazov's sudden death in late 2006, observers hoped Turkmenistan would follow a steadier path under new leader Gurbanguly Berdymukhamedov. While Berdymukhamedov in 2007 has certainly been consistent in his calls for limited domestic reform, Turkmenistan's energy policy remains shrouded in uncertainty.

Turkmenistan, namely the country's vast reserves of natural gas, is a critical element in a Russian initiative to foster a regional energy cartel. [For background see the Eurasia Insight archive]. Such a cartel, from the Kremlin's viewpoint, would ensure desired price and production levels, as well as render the US geopolitical position in Central Asia untenable.

Many experts believed that when Russia, Kazakhstan and Turkmenistan signed a deal in May to expand the Prikaspiisky pipeline, Ashgabat had finally committed itself firmly to Moscow's energy blueprint. [For background see the Eurasia Insight archive]. Since then, however, Berdymukhamedov has defied expectations, and has continued to pursue what he describes as an omni-directional or multi-vector foreign policy.

Berdymukhamedov's movements over the past week underscore his determination to keep Turkmenistan's energy options open. And that determination threatens Russia's present advantage in Central Asia's energy game. [For background see the Eurasia Insight archive].

On November 4, Berdymukhamedov held "frank and friendly" talks in Ashgabat with Chinese Prime Minister Wen Jiabao, according to Turkmen television. Energy issues figured prominently in the discussions, and Turkmen reports quoted Wen as characterizing Turkmenistan as one of China's "most reliable, trustworthy and friendly" partners. The Turkmen leader expressed eagerness to proceed with construction of a pipeline that would enable Ashgabat to deliver to China upwards of 30 billion cubic meters of natural gas per year for 30 years starting in 2009. [For background see the Eurasia Insight archive]. Berdymukhamedov noted that bilateral trade turnover had climbed to $303 million during the first nine months of 2007, up from $24.7 million for all of 2000, going on to predict that completion of the pipeline would foster a dramatic rise in commerce. In addition, Turkmenistan granted licenses to Chinese entities to explore for and possibly develop natural resources on the right side of the Amudarya River.

For Ashgabat, the Chinese pipeline project clearly represents an effort to diversify gas exports away from Russia, which now takes more than 70 percent of Turkmenistan's gas production. Yet, among foreign experts, skepticism continues to surround the Chinese project. For one, since the two countries lack a common border, other countries – Kazakhstan and/or Uzbekistan – will have to get involved. Meanwhile, many observers question whether Turkmenistan has the natural gas reserves to honor all its obligations. Russian officials and observers have habitually downplayed Turkmenistan's capabilities to dissuade others from buying its gas, especially China, along with India and Pakistan.

Berdymukhamedov insists that Turkmenistan has more than enough gas to meet its commitments to both Moscow and Beijing. His government also appears to have gained the support of neighboring states. For example, Uzbekistan's foreign minister, Vladimir Norov, has signaled Tashkent's support for the pipeline.

The realization of the Turkmen-Chinese pipeline could dash Russia's hopes to maintain a controlling interest over energy flows in the region. And to add insult to injury for Russia, the Chinese could end up paying slightly less for Turkmen gas than what Moscow pays. Turkmen gas currently costs Russia $100 per thousand cubic meters of gas, and China is striving to fix its price at $90/tcm.

Turkmenistan is not only looking east, but it also intent on cultivating stronger ties with the West. The day after his talks with Wen, Berdymukhamedov departed for discussions with top European Union officials in Brussels. There, Turkmen leader insisted that his country was maintaining an "open door" policy, according to a Turkmen television report.

On November 6, news reports circulated that Britain had concluded a "protocol of intentions" with Turkmenistan, opening the way for British interests to participate in the development of the Central Asian nation's energy sector.

On top of his open-door stance, Berdymukhamedov continues to entertain the possibility of Turkmenistan's participation in a trans-Caspian pipeline. [For background see the Eurasia Insight archive]. Taken together, Turkmenistan appears in no hurry to align itself with one of Central Asia's major energy players – Russia, China, the EU or the United States. Instead of drawing to a close, the regional energy contest might now just be starting to really heat up. Berdymukhamedov's actions also reinforce the point that what happens in Turkmenistan and Central Asia no longer stays in Turkmenistan and Central Asia.