Turkmenistan seeks help from Russia for natural gas export routes

by Jennifer DeLay

After the Soviet Union's collapse, it seemed clear that establishing export routes that did not involve Russian pipelines would be a priority for Turkmenistan and other gas-producing states in Central Asia. Indeed, Turkmenistan has made efforts to create new export corridors for its natural gas over the last decade in order to shed its dependence on Soviet-built transport networks and gain access to lucrative European markets.
Its efforts have not been as successful as initially expected, however, and in recent weeks Ashgabat has indicated that it is willing to cooperate with Moscow with respect to gas exports. On June 24, Turkmenistan's President Saparmurat Niyazov hoped to see Rosneft, Russia's last fully state-owned oil company, and Itera, an international gas trader that is believed to have close ties to the Russian gas monopoly Gazprom, help build a pipeline to the Indian Ocean.

A source in Turkmenistan's Oil and Gas Ministry said that Niyazov had urged the heads ofthese two companies to look into the prospects for construction of a high-capacity pipeline from Turkmenistan to Pakistan via Afghanistan. When Ashgabat first began discussing plans for this gas transport project in the mid-1990s, it asked Gazprom to participate and reserved a 10 % stake in the pipeline sponsor group for the Russian company.
Gazprom declined the offer, however, and the Turkmenistani government eventually asked Unocal, a US firm, to head pipeline construction efforts. Unocal backed out of the project in late 1998 due to the ongoing civil conflict in Afghanistan. Officials in Ashgabat said earlier this year that they would like to see the US company back on board now that the Taliban militia has been ousted from Kabul, but Unocal appears to have little or no interest in the project.

Now Niyazov is once again seeking Russian support for the pipeline. He may have few other choices, since the undertaking has not attracted much in the way of support from other Western majors. Yet he appears convinced that Moscow may be willing, this time around, to entertain the idea of establishing a major gas export route that does not cross Russian territory.
This is something of a gamble, given the events of the last decade. Gazprom, which operates Russia's gas pipeline system, blocked Turkmenistani gas exports for a time in the mid-1990s. And in the summer of 1997, Gazprom's then-CEO Rem Vyakhirev said he had no intention of ever letting Central Asian gas flow through Russian pipelines to Europe.

The situation has changed since 1997, however. Vyakhirev no longer heads Gazprom and no longer has any influence over the company's top management. The Russian foreign policy establishment, meanwhile, seems less intent than it was five years ago on restricting the flow of natural resources from former Soviet republics.
For example, officials in Moscow have made no move to block the recent agreement between Gazprom and KazMunayGaz, Kazakhstan’s new state oil and gas company, on the establishment of a joint venture that will bring Kazakhstani natural gas to market in Europe. Indeed, Russian diplomats were in discussions with Kazakhstani officials on a long-term agreement for increased oil flows through Russian pipelines around the same time that the Gazprom-KazMunayGaz deal was concluded.

As such, Niyazov's turn to Russia does not exactly represent a reversion to the old Soviet pattern after a valiant struggle to break free after years of domination by Moscow. The Turkmenistani leader is asking for Russian help at a time when the Kremlin appears to be less bent on reasserting control over the near abroad and less worried about the possibility that Central Asian gas might compete with Gazprom's output on the European market. He is also proceeding on the assumption that Moscow is now willing to consider plans for the establishment of a non-Russian export route for Central Asian gas.
It would be a mistake, though, for Ashgabat to place too much emphasis on Russia. Gazprom has been an unreliable partnerin the past, and many questions remain about the exact nature of Itera's relationship with the gas monopoly. Rosneft, meanwhile, has not participated in a gas pipeline project of this magnitude before.

The Russian government, moreover, does not appear entirely reconciled to the prospect of Central Asian gas flowing through non-Russian pipelines; indeed, the agreement between Gazprom and KazMunayGaz provides for Kazakhstani gas to be sent to Europe via the Russian pipeline network. As such, Niyazov should investigate other options even as he seeks support from Moscow for the pipeline through Afghanistan.