Turkmenistan: Nabucco Pipeline Partner Wins Exploration Rights in Caspian, Will Study Export Routes to Europe

German energy giant and partner in the Nabucco pipeline project, RWE AG, has won exploration rights in Turkmenistan and is set to examine the exportation of gas directly to Europe.

Michael Rosen, a spokesman for the supply and trading arm of the company, told EurasiaNet that "RWE and Turkmenistan have agreed on long-term cooperation covering various aspects of energy including upstream and gas supply."

"Amongst other things, the parties have agreed upon investigating and discussing first direct deliveries of natural gas from Turkmenistan to Germany and Europe," an RWE press statement added.

RWE AG chief executive Juergen Grossmann confirmed that the exploration rights deal included the possibility of energy export to Europe, adding that a number of transit options were being explored. RWE will develop Block 23 in the Turkmen portion of the Caspian Sea.

"This partnership with Turkmenistan is a big step towards future gas supply contracts with Turkmenistan. These will lead to further diversification of Turkmenistan's export portfolio and improve the security of gas supplies to Germany and Europe," Grossman said in a statement released April 16.

The agreement is a major coup for the Nabucco consortium member. However, Andrei Grozin, director of the Central Asia Department at the CIS Institute in Moscow, told EurasiaNet that Turkmenistan's capacity for flip-flopping should not be underestimated and that the energy-rich state may be merely interested in "intimidating" Gazprom at a time when the relationship appears to have faltered.

"I think [Turkmenistan] is trying to demonstrate its multi-vector politics to Russia, to Europe and to its closest neighbors, Uzbekistan and Kazakhstan. It's trying to intimidate Gazprom. Also, it is trying to demonstrate to Europe its openness to them and trying to be attractive," he said.

He also said Turkmenistan's decision to open its reserves up to a European investor was for the benefit of the regional audience, not just observers in Moscow and Brussels.

"There has always been an unseen battle [between] Uzbekistan and Kazakhstan for regional leadership; Turkmenistan was never taken into account. But now, Turkmenistan is also trying to demonstrate [to them] that it can influence and can have its own strong positions. [They are also] trying to bolster the Turkmen president's image as well as the national image."

But, Grozin added, the reality on the ground leaves little room for Turkmenistan to maneuver despite the groundbreaking partnership with RWE.

"If Gazprom stops purchasing gas from Turkmenistan, the country will have big problems. Three-quarters of its budget comes from gas money and if that income stops it will definitely create social and economic problems for Turkmenistan," he added.

On December 22, 2008, RWE AG entered a partnership with Austrian gas giant OMV to form Caspian Energy Company Ltd (CEC).

According to a RWE AG statement, "the company has been set up in order to explore comprehensive infrastructure solutions that will link the vast gas resources of the Caspian region to Europe. [. . .] The respective gas could then be fed into the existing 'South Caucasus Gas Pipeline' or other newly built pipelines and from there on into Turkey and the 'Nabucco Gas Pipeline,' which will form the backbone of this 'Southern Gas Corridor,'" the statement added.

Separately, Russian Prime Minister Vladimir Putin has ordered Deputy Prime Minister Igor Sechin and Gazprom boss Alexei Miller to "keep a watch" on relations with Central Asian gas partners, Uzbekistan, Kazakhstan and Turkmenistan, news site newsru.com reported April 16.

A Russian delegation will also attend a conference on energy security in Ashgabat scheduled for April 23-34, the report said, adding that gas exports on the Davletbat-Daryalik pipeline near the Turkmen-Uzbek border have not yet resumed following an explosion on April 9.