Press Service of the President of Russian Federation, kremlin.ru
President Dmitry Medvedev and President Gurbanguly Berdymukhamedov in Ashgabat, October 22, 2010
During his visit to Ashgabat October 21-22, Russia's President Dmitry Medvedev discussed the possibility of Gazprom, Russia's state-owned gas monopoly, becoming involved in the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, Russian and international wire services reported.
Kommersant, the Russian business daily, has more details. President Medvedev brought with him Vice Premier Igor Sechin, Foreign Minister Sergei Lavrov and presidential aide Sergei Prikhodko. The Kremlin is so eager to get involved in TAPI that as Sechin told Kommersant, Gazprom is prepared to take part in any capacity -- "as a contractor, as a designing company, and as a full-fledged participant of the consortium." Sechin says Gazprom is willing to invest its own money in the risky project, which would involve laying pipe across Taliban-held territory in Afghanistan and Pakistan. "Not a single investor has displayed such boldness," comments Kommersant.
Turkmenistan's President Gurbanguly Berdymukhamedov has energetically and enthusiastically promoted TAPI in recent months, bringing the TAPI ministers together at meetings in Ashgabat in anticipation of a December meeting of heads of state to finalize an agreement. The parties announced that they were prepared to bid out the job of building the pipeline to a "global energy giant"-- which was not specified, although analysts were oriented toward expecting a Western energy company.
Russia's interest in TAPI could be motivated by reluctance to see Turkmenistan bypass Moscow-dominated energy corridors to sell gas to the West, says Kommersant. Russia is said to have lost interest in the Iran-Pakistan-India (IPI) pipeline, which earlier Gazprom had promised to help build, The Hindu reported. Russia's greater support now of international economic sanctions against Iran account for this.
President Berdymukhamedov's reason for inviting President Medvedev to Ashgabat was to discuss two issues, says Kommersant. First, there is the question of Gazprom's meager orders for gas, which this year are down to 10-11 billion cubic meters (bcm) of gas. Due to the mutual recriminations following an explosion on a Turkmen gas pipeline last April, as well as the downturn in global demand, Russia reduced its deliveries from a one-time high of more than 50 bcm, and scrapped planned purchases of 80-90 bcm.
Under a new agreement signed after President Medvedev's visit to Ashgabat last December, Gazprom could buy as much as 30 bcm -- but hasn't. The price has dropped, too. Sechin told the Turkmen leader that Gazprom would not be increasing its orders because of reduced demand from the European Union. Citing an unnamed source who participated in the negotiations, Kommersant said this came as an unpleasant surprise to President Berdymukhamedov. The exact amounts will now be haggled over by Gazprom CEO Aleksei or his deputy Valery Golubov, who were not in the delegation last week and whose relations with the autocratic Turkmen leader are said by Kommersant to have been "ruined" -- and may require Sechin's involvement again.
Second, both sides apparently agreed to freeze the long-stalled Prikaspiisky pipeline due to the drop in Europe's demand as they believe consumption will rise slowly again in the next 3-4 years again, but only by small amounts, Sechin told Kommersant. Even so, Russia and Turkmenistan do not plan to drop the project completely -- they only hope to tie it to actual market conditions, added Sechin.
By signalling a firm intention not to increase gas purchases and indefinitely postponing the Prikaspiisky pipeline, Moscow will likely drive Ashgabat into seeking more cooperation with Europe, says Kommersant. According to unidentified Turkmen diplomats interviewed by Kommersant, President Berdymukhamedov's desire to becoming involved in Nabucco is "growing stronger day by day". Sechin scoffs at this notion. "The current situation in the gas market in Europe enables us to say that there are no prospects for Nabucco. I say this without sarcasm," Kommersant quoted Sechin as commenting.
Richard Morningstar, U.S. special envoy for Eurasian energy, said at a recent appearance at the Central Asia-Caucasus Institute in Washington, DC that he believes it "unlikely" that Turkmenistan will supply gas to Nabucco, EurasiaNet reported. He said President Berdymukhamedov has made progress in getting the four countries together on TAPI, but that unless an international oil company would be allowed to develop Turkmenistan's gas fields, it would be hard to find a supporter for the risky project.
President Berdymukhamedov's own attitude toward the prospect of Gazprom participating in TAPI isn't evident from the Turkmen state media. All the State News Agency of Turkmenistan (TDH) had to say about the meeting with the Russian leader was that it took place in "an atmosphere of mutual understanding and trust, and a business-like, constructive tone" and that Russia is a "strategic partner" of Turkmenistan, with US $1.86 billion in trade for the first eight months of 2010. Turkmenistan is making steps toward diversifying its exports to Russia, TDH noted, particularly by working with Russia's regions of Tatarstan and Astrakhan and the city of St. Petersburg.