Turkmenistan plans to diversify its gas exports

Jun 12, 2007 02:00 AM

Turkmenistan wants to diversify its gas exports, but experts say the Russian gas giant Gazprom will put up fierce resistance, and in any case the country will not secure new contracts unless it makes its energy sector more transparent.
On June 5, President Gurbanguly Berdymukhammedov announced plans to diversify Turkmenistan’s energy exports via all the routes that are now at the planning stage -- leading to China, Iran, India and Europe. The announcement comes one month after Berdymukhammedov signed an agreement with Russia and Kazakhstan to build a new Caspian gas pipeline which experts say will strengthen Moscow’s hold on Central Asian gas and ruin the European Union’s plans for a Transcaspian pipeline bypassing Russia.

Most Turkmen gas is sold to Gazprom via the existing Central Asia-Centre pipeline, and the Russian firm then sells it on to Europe. Analysts say that Turkmenistan will not be ready to diversify gas exports until it can give investors accurate information about the state ofits reserves, and until it can demonstrate its ability to overcome Russian resistance.
“Any free gas on the market that hasn’t been secured by Gazprom could upset pricing policy,” said an NBCentralAsia economic expert. “Russia is fully aware of this and will try as hard as it can not to let its [Central] Asian partners get access to gas markets.”

It is unlikely Turkmenistan will live up to Berdymukhammedov’s pledge any time soon because the authorities are still not prepared to declare what reserves the country actually has or give potential buyers free access to information, the expert argues.
“If it invests in Turkmenistan’s gas sector, Europe, for example, will definitely require transparent deals and transfers, but the Turkmen leadership does not welcome such demands,” he said.

Rovshan Ibrahimov, head of the international relations department at Qafqaz University in Azerbaijan, says Turkmenistan will be unable to supply several different customers at once for the immediate future, because itis currently only producing enough gas to honour the gas deals signed with Russia. Energy experts believe that once Turkmenistan overcomes the economic and technical hurdles to diversifying gas exports, it will have to deal with the political aspects of an expanded pipeline network.
“When there are really big reserves, the problem of which pipelines to fill arises, since the issue of pipeline quotas -- how much gas should go via each route -- it is not so much economic as political,” said Kazakhstan-based analyst Petr Svoik.

Source: IWPR
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