Turkmenistan: Berdymukhamedov Makes Nabucco Pledge, Moscow Takes Energy Hits

Even before the July 13 signing of an intergovernmental agreement to formally launch the Nabucco pipeline, the project received a potentially important boost from Turkmenistan, which pledged to ship an unspecified amount of natural gas via the long-planned route.

Turkmenistan needs 16 billion cubic meters (bcm) of gas for domestic consumption. Ashgabat also sells 40 bcm annually to the Russian state-controlled conglomerate Gazprom and will soon sell 40 bcm per year to China. In addition, Turkmen officials agreed on July 11 to sell 14 bcm per year to Iran. But the country's leader, Gurbanguly Berdymukhemedov, insists there's plenty left over to pump into the Nabucco route once it's completed.

Turkmen officials have expressed interest in Nabucco in the past, but Berdymukhamedov's July 10 statement was the clearest yet on Ashgabat's intent to export via the route, which is supported by the United States and European Union. [For background see the Eurasia Insight archive].

"The results of an independent audit carried out last year and recent discoveries made by our geologists once again show the world community what huge gas reserves our country possesses," Berdymukhemedov asserted. "This makes it possible for us to carry out certain work related to the implementation of various [gas export] projects, including the Nabucco project."

Berdymukhamedov's comments are certainly reason for hopeful speculation among Nabucco proponents. But experts caution that Turkmenistan has yet to move beyond tantalizing public pledges. These skeptics won't believe in Ashgabat's commitment until a clear-cut contract is signed with the Nabucco pipeline consortium. Some experts wonder whether Ashgabat has all the gas that it says it does.

If Turkmenistan has as much gas as it claims, "there might be enough gas to meet its contractual obligations to Russia, China and other consumers, including Nabucco," Vitaly Kryukov, an analyst with Capital investment group, told Gazeta.ru on July 13.

At this stage, more than a few energy analysts believe that Berdymukhamedov's statements concerning Nabucco are designed to gain leverage over Gazprom, which, at present, is Ashgabat's primary purchaser of gas. Gazprom and the Turkmen government have been locked in a pricing dispute since an early April pipeline explosion. [For background see the Eurasia Insight archive]. Some estimates suggest the Turkmen government is losing up to a $1 billion per month in gas revenue, due to the Gazprom impasse.

"Gazprom is in negotiations [with Turkmenistan and the Turkmen government wants to] accelerate the achievement of acceptable solutions," Kryukov said. "Gazprom will make every political and economic effort it can to prevent Turkmenistan [from supplying] Nabucco. But whether or not they'll be able to do this remains to be seen."

Construction of the 3,300-kilometer-long Nabucco route is due to begin in 2011 and be finished by 2014. Initially the pipeline will pump 14 bcm of gas to Europe per year. By 2020, it should carry 31 bcm of gas annually from the Caspian and the Middle East to Europe via Turkey. To date, only Azerbaijan has made a commitment to send gas to Europe along the proposed $10 billion pipeline.

Iran, Iraq, Egypt, Qatar, Syria, Kazakhstan, Uzbekistan and Russia could yet be suppliers. In conjunction with Berdymukhamedov's Nabucco comments, energy analysts took note of Ashgabat's move to boost exports to Iran. The existing Iranian pipeline network could serve as a bridge to link Turkmenistan with the Nabucco route's terminal in Turkey.

Richard Morningstar, the US Special Envoy for Eurasian Energy who attended the July 13 signing ceremony in Ankara, hinted that Iran's participation could depend on nuclear concessions. [For background see the Eurasia Insight archive]. Under present conditions, though, Washington would steadfastly oppose Tehran's participation, Morningstar said. "We don't believe Iran should be a participant. We have reached out to Iran. So far we have not had any positive response," he said.

Morningstar also emphasized that Washington has sought to involve Russia in new export arrangements for the European Union. "Russia can participate as a partner,' Morningstar said. "We're trying to engage with Russia in the energy area. We don't want to see a zero-sum game."

Turkish Prime Minister Recep Tayyip Erdogan came out forcefully for Iranian participation. "We want Iranian gas to be carried to Europe through Nabucco pipeline when conditions are met," Erdogan was quoted as saying by Turkish media outlets. "We also believe that it will be possible one day to offer Russian gas to the European market through Nabucco. In fact, it is also possible for Qatar to take part in the project thanks to a liquefied natural gas terminal to be set up in Turkey."

Separately, in what Russian media reports have billed as a "mortal blow," Bulgaria has frozen cooperation on the Gazprom-controlled rival gas pipeline project, South Stream, and a number of other Russian-backed energy projects.

Officially the projects are "on hold until the country's new prime minister-designate Boiko Borisov has carried out a review," RIA Novosti reported on July 13.

But a commentary distributed by the Regnum news agency sounded a pessimistic note. "This [could] cause a fatal blow to all of Russia's long-term energy plans and strategy in South-Eastern and Central Europe and the Mediterranean region," the report said.