Iran, it seems, was calling Turkmenistan’s bluff earlier this summer when Tehran said it no longer needs gas from its northern neighbor. Now a top official says Tehran will keep buying.
That is good news for Turkmenistan, which is so dependent on its main gas customer, China, that it is starting to look like a client state.
Iran is committed to increasing its own domestic gas production to up to a billion cubic meters per day by 2017, a target one industry analyst thinks is possible but unlikely within such a tight timeframe. But supplying Iran’s northern regions with domestic gas is complicated by its lack of infrastructure. So, since 1997, Iran has bought gas from Turkmenistan to service its north, and sold its own gas abroad.
Deputy Oil Minister Hamid Reza Araqi said this week that his boss and Turkmen President Gurbanguly Berdymukhamedov had met in Ashgabat this month to hammer out a new purchase agreement. According to regional news agency AKIpress, the meeting happened November 7.
“The deal makes it possible to raise the amount imported from Turkmenistan in cold months of the winter; starting in the beginning of the current year, Turkmenistan has exported 24-25 million cubic meters of natural gas to Iran [daily],” said Araqi, in comments carried in English by Iran’s Mehr news agency on November 19.
The agreement contains a provision to increase this to 30 million cubic meters daily, he added.
Turkmenistan has the world’s fourth-largest natural gas reserves and exports billions of dollars worth of gas every year. But its copious reserves are apparently not enough to ensure a stable supply for residents of this isolated, totalitarian country.
Shortages in northern villages prompted a rare protest on October 28, reports the Chronicles of Turkmenistan, a news website run by exiles. Several dozen women blocked a highway to draw officials’ attention to the shortages, which come with the onset of autumn and are affecting residents’ ability to heat their homes and cook. The shortages, says Chronicles, have even hit Dashoguz, a town of about 200,000 people:
Residents have repeatedly called on gas providers [for help], but the latter complain that very little gas is being delivered; moreover, the pipes and equipment are very run-down, while specialists capable of maintaining all this in working order are simply nowhere to be found. The authorities are not providing either the funds or the pipes to repair gas mains.
The web page for Russia's joint SCO/BRICS summits next year in Ufa..
Russia's Foreign Minister, Sergey Lavrov, gave a tour d'horizon of his country's rapidly evolving foreign policy, including some of the most explicit hints to date that the country is reorienting away from Europe and toward Asia -- especially China.
In an October 20 speech to members of the country's ruling party, United Russia, Lavrov addressed familiar topics like the need for a multipolar world and perfidy of the West. But in the past Russian officials tend to elide the details of what an alternative to the Western-led world would look like.
Particularly striking in Lavrov's speech was the attention given to China. This was in his introduction:
The realignment, or, I would even say, the deconcentration of the global balance of forces, is a hallmark of our time. Most clearly, this can be seen in the greater economic power and increasing political clout of the Asia-Pacific Region. These countries have largely assumed the role of a driver of global economic growth, a role which was traditionally performed by the United States,Western Europe and Japan. As we can see, China achieved the greatest success on this path and, according to the latest report issued by the International Monetary Fund, has for the first time become the world’s largest economy in terms of purchasing power parity Based on the findings of the IMF experts, the seven largest so-called “emerging economies,” including our country, outdid the seven industrialized Western countries in terms of combined GDP. That’s a totally new picture of the world that does not fit into the centuries-old notion of Western dominance in the global economy, finance and politics.
Moscow’s sanctions-struck energy giant Gazprom has announced it is no longer interested in buying Central Asian gas, leaving Turkmenistan and Uzbekistan dependent on exports to China.
Contractually, Gazprom officials have noted they are locked into obligations to buy from Ashgabat and Tashkent for the short term. But Gazprom is “working to annul these contracts,” Vsevolod Cherepanov, head of Gazprom’s Department for Gas Production, said at the St Petersburg International Gas Forum on October 7. Cherepanov did not explain the reasons for cutting back on purchases in Central Asia, but noted that Gazprom’s domestic production is expected to increase in the coming years.
According to Gazprom’s website, the official line remains that the production and import of “natural gas from Central Asia and the Transcaucasian region is an important element in the formation of [Gazprom’s] resource base, meeting the demands of Russia’s internal market, CIS countries and beyond. The business strategy of Gazprom in Central Asia rests on a strengthening of its position in this region. This will maintain and increase the share of Russian gas provided to its traditional markets in Europe.”
Gazprom’s exit will leave purchases of Central Asian gas an increasingly Chinese pursuit. In the two years prior to the opening of the China-Turkmenistan pipeline, which went into operation in late 2009, Gazprom imported an average of 63.4 billion cubic meters of gas (bcm) from Central Asia annually, over two-thirds of which came from Turkmenistan. In the years since, the company says, the volume going to Russia has shrunk to an average 34.1 bcm annually, less than a third of which is sourced in Turkmenistan.
A group photo of the presidents of the six SCO member states, at the 2014 summit in Dushanbe. Will the 2015 photo have two more presidents? (photo: SCO)
After last month's summit in Dushanbe, the Shanghai Cooperation Organization appears poised to finally expand its membership after years of discussion and speculation. SCO members signed protocols for admitting new members, and various officials from member countries have signaled that India and Pakistan will be invited to join at next year's summit in Ufa, Russia.
This would be a watershed move for the organization, which has captured the geopolitical imagination of many around the world who see it as a growing counterweight to Western dominance. That mystique has grown in spite (or perhaps because) of the fact that the group has thus far been more about talk than action.
The SCO is now dominated by two powers, Russia and China, and also includes the Central Asian republics Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Those were the original six members when the group was founded in 2001, and despite many entreaties to join -- in particular by India, Pakistan, and Iran -- the group has never expanded. So why is it doing so now? And will expansion add to the group's clout, or dilute its ability to act?
Russia's interest in SCO expansion is relatively obvious: in the wake of the collapse of its relations with the West, the Kremlin is eager to make it appear as if it has plenty of friends around the world and so doesn't need Europe or the U.S. That's resulted in a renewed enthusiasm in Moscow for the SCO; Russia had previously mistrusted the group as being a possible stalking horse for Chinese expansion into what it considers its own strategic backyard, Central Asia.
Dushanbe and Beijing have launched construction of a key gas pipeline that will turn Tajikistan into a transit country for Central Asian gas supplies to neighboring China, the world’s largest energy consumer.
The pipeline will lock Tajikistan into an energy partnership with its powerful neighbor from which the former Soviet Union’s poorest country will reap millions of dollars every year in transit fees.
The project has “immense political, economic, and historical significance,” Tajik President Emomali Rakhmon said at the groundbreaking ceremony on September 13. His visiting Chinese counterpart, Xi Jinping, described the pipeline as a “symbol of China-Tajikistan friendship.”
The link will supplement the existing Central Asia pipeline running from Turkmenistan to China via Uzbekistan and Kazakhstan. The new section bypassing Kazakhstan and passing through Kyrgyzstan and Tajikistan, known as Line D, will increase the pipeline’s overall annual capacity by 30 billion cubic meters, to around 85 billion. Like the other lines, it will also pass through Uzbekistan.
Tajikistan will host the longest section of the new 1,000-kilometer spur, with 400 kilometers passing through its territory. China will pick up the $3.2 billion price tag for that leg.
Beijing is already ramping up gas supplies through the existing Central Asia pipelines. A third line known as Line C started pumping from Turkmenistan in May, almost doubling the pipeline’s overall annual capacity to 55 billion cubic meters.
Turkish President Recep Tayyip Erdogan has said that "disagreements" have arisen with China over the two countries' controversial deal on air defense systems. And it appears that a French offer -- which would be the much-preferred option for Turkey's NATO partners -- is gaining momentum.
Ever since Turkey announced last September that it was picking a Chinese system over American, French, and Russian competitors, U.S. and NATO officials have been pressuring Ankara to change its mind. They have argued that it would be impossible to integrate Turkey's NATO-compatible air defense systems with the Chinese system without the risk of leaking sensitive data to China. For some time there have been indications that Ankara is rethinking its decision, but Erdogan's comments on Sunday make that explicit.
"Some disagreements have emerged with China on the issues of joint production and know-how during negotiations over the missile defense system," Erdoğan told reporters as he returned from the NATO summit in Wales, private television channel NTV said on Sunday.
"Talks are continuing despite that, but France, which is second on the list, has come up with new offers. Right now, our talks with France are continuing. For us, joint production is very, very important," he said.
Kyrgyzstan President Almazbek Atambayev, along with other officials from Kyrgyzstan and China, open Chinese-built officers quarters in Bishkek. (photo: president.kg)
China has built officers quarters in Kyrgyzstan and has promised Kyrgyzstan an additional $16 million in military aid, as the military elements of China's relations with Central Asia gradually grows.
On Tuesday, the Kyrgyzstan armed forces announced that China was providing 100 million yuan, or about $16 million, in aid: "This money will be directed toward military-technical upgrading of weapons and equipment. In addition, the grant will include special and transport vehicles. The Chinese grant will begin to be implemented this year."
And the following day, Kyrgyzstan President Almazbek Atambayev formally opened the 108-unit apartment building in Bishkek. The new quarters got a glowing review in the press, which raved about the modern conditions and emphasized how happy the Kyrgyzstani officers were to get new apartments. (But there was an aside: "However, the new apartments have one peculiarity. For some reason the floors of all rooms, including the living room and bedroom, are tiled. Probably the Chinese consider this comfortable. However, one shouldn't look a gift horse in the mouth, and we're not going to.")
Ninety percent of Turkmenistan’s exports are hydrocarbons. And 70 percent of all Turkmenistan’s exports went to China last year. So news that Iran, one of the country’s top three gas buyers, will soon stop importing Turkmen gas cannot be welcome in Ashgabat. It is almost like Turkmenistan threw off the Russian yoke only to shoulder China’s.
On August 11, Iranian Oil Minister Bijan Namdar Zanganeh said Iran would no longer need Turkmen gas as of next year, news agency Trend.az quoted him as saying. Zanganeh explained that Iran is ramping up domestic production.
It is quite a turn of events for Turkmenistan. In early 2010 a new, second pipeline bringing Turkmen gas to Iran was launched. At that time leaders in the two countries spoke about gas imports to Iran reaching up to 20 billion cubic meters (bcm) annually. A new gas-compressor station started operation in western Turkmenistan in December 2013, built specifically to export more gas to Iran.
The joint military exercises of the Shanghai Cooperation Organization will involve about 7,000 troops, the largest number in an SCO exercise in many years, as the organization seems to be taking on a new prominence in the wake of collapsing Russia-West relations.
The bulk of the troops exercising, as in past years, appear to be from China. Russia announced that it is sending about 900 troops, as well as hardware including four Su-25 jets and eight Mi-8MT helicopters. Kazakhstan said it is participating with about 300 troops from an air-mobile unit. From Tajikistan, more than 200 soldiers are participating, including members of an unnamed "rapid reaction unit." (An aside: one wonders if it is one of the special forces units that the U.S. has trained.) Uzbekistan, as usual, does not seem to be participating at all. Kyrgyzstan is sending about 500 soldiers. So if it's 7,000 total, that's about 5,000 from China.
The exercises, Peace Mission 2014, will be held August 24 to 29 in China's Inner Mongolia region. But participating countries have already started moving their troops toward China. "Loading up -- that's already a stage of the exercise. We're trying to improve, getting used to loading up our equipment," said Ruslan Muzdybayev, the deputy commander of Kazakhstan's air mobile forces for military readiness.