Turkmenistan to emphasize diversification of energy resources market

Jan 07, 2009 01:00 AM

On the background of the gas crisis between Russia and Ukraine, as well as the global economic recession, Turkmenistan will more emphasize the market diversification of energy resources and is economy, local experts believe.
"Presence of gas Klondikes is not a guarantee of success and this fact dramatizes the latest news. There is always need for alternative routes. It is necessary to rely on interior reserves in order not to be a hostage of the Holland disease (dependence of treasury on deliveries of raw materials). The Turkmen government will emphasize thee milestones as well," a Turkmen expert told.

He said that Turkmenistan has faced a "mirror situation" around deliveries of energy resources to Tajikistan and some part to Afghanistan due to absence of a customers' contract with the transit Uzbek government. Although Russia and Ukraine, which are having a transit contract, cannot agree on a price for the Ukrainian market, a transit issue has become a leverage of pressure.
Official Ashgabat sells energy resources only within its borders, yielding to sharp transit debates of raw material importers. The list includes natural gas, whose considerable reserves are confirmed by the British Gaffney, Cline & Associates in the Turkmen territory, which included the country with 5 mm people in the top five of gas seats of the Earth.

The Turkmen authorities believe that an era of bilateral relations in energy resource deliveries should yield to global energy security under the United Nation's aegis, which finally should adopt a special Convention on security of international pipelines. The Turkmen government is prepared to call a representative conference on this matter in Ashgabat.
"This is a strong equalizing factor envisaging efficient multilateral partnership in protection of energy infrastructure, creation of favourable foreign political conditions its normal functioning, for constructive cooperation of all participants of the pipeline projects, including producers, transitors, and consumers of energy resources," the Turkmen Foreign Ministry noted.

"By the way, Turkmenistan has lived in a regime, when a gas key has been frozen due to non-payment of Kiev and intractability of the Kremlin in the issue of prices," the Turkmen expert mentioned.
At that time the country was faced with an issue on self-sufficiency and began to grow wheat and to develop animal husbandry in the late 1990s, he said. In recent years, Turkmenistan vigorously took up promoting the processing products output -- both oil and gas. Export of liquefied gas is growing -- it is purchased by Japan and the European countries. Almost $ 2 bn was invested in the largest refinery in Turkmenbashi. Funds are invested in gas processing, chemical and textile industries, and cotton processing.

Yet all these currency earnings of Turkmenistan are not comparable to those received from the export of the "blue fuel". Ashgabat argues they possess huge reserves of hydrocarbons that provide confidence in the expediency of simultaneous implementation of several gas projects in various directions. Thus, according to the plans of state concern Turkmengaz, annual export will increase from the current 50 bn cm to 125 bn cm by 2020, and to 140 bn cm by 2030.
Turkmenistan's Foreign Ministry stressed that "the diversification of energy supplies is not just a lucrative and promising national project. Today it is an objective requirement of the rules in the world market, the most important condition for the healthy functioning of the global economy, a kind of barrier to a large extent saving it from the deformations and imbalances".

Turkmenistan is already moving in this direction. In late 2009, a "breakthrough" is expected to take place in the geography of Turkmen gas deliveries -- finally there will be the first tangible alternative to the traditional route through Russia. A gas pipeline to Iran has been operating since 1996, but it transports small volume of fuel. China intends to acquire up to 40 bn cm of gas per year during 30 years.
The traditional buyer Gazprom, which has been holding "hot" disputes with Kiev over transit to freezing Europe for many years, has many times stated "it is ready to buy as much gas as produced in Turkmenistan". According to a long-term contract, Russia is interested in increasing exports from Turkmenistan from the current 40-50 bn cm of gas per year to 80 bn cm.

"This is a justifiable step by Moscow," a Turkmen gas transportation company employee told. He believes that despite the fact that Russia controls more than a quarter of world gas reserves (more than any other country), the lion's share of its resources is concentrated in Western Siberia. And harsh natural conditions and their remoteness from world markets make them expensive to develop.
Not only India but Europe, whose 40 % of demand in gas is provided by Russia, strive for the Caspian region as an alternative, in particular for Turkmenistan whose presence adds "expediency" in any project. The unexampled gathering of representatives of companies and the international organizations from Western countries at a petroleum conference in Ashgabat in November 2008 is clear evidence.

Representative of the European Committee, Derek Taylor, expressed a single meaning those days in the capital of Turkmenistan.
"Since the 2006 gas crisis in Ukraine, diversification of gas supplies has been one of the most important trends on the political agenda."
The EU countries can offer their partners in Turkmenistan safe cooperation: growing consumer market, profitable prices and world class companies which will help to develop gas resources, he said. From his point of view, all this should pull Turkmenistan to join the advertised Nabucco project targeting to "bring" Caspian resources to the All-European "house".

Recently, activity in this direction was moved up. In autumn, Turkmenistan's President Gurbanguly Berdymukhamedov paid a visit to Austria and Germany. In their turn, the presidents of Turkey, Azerbaijan, Bulgaria and Hungary -- all these countries-members of the transnational project -- visited Ashgabat.
At the same time, Ashgabat had an experience in 2008 when practically all pro-Western projects failed. Since beginning US military operations against the Taliban movement, the US company Unocal had to leave the initial ambitious oil gas pipeline Turkmenistan-Afghanistan-Pakistan (TAP) early 1990s. The Transcaspian project to Turkey and Europe with participation of the consortium headed by US PSG and initially working under agreement between Turkmenistan and Turkey on purchase-sale in the amount of 30 bn cm of Turkmenistan's gas was failed.

That time Ashgabat didn't agree to give half of the pipe for Azerbaijan's gas suddenly found at the Shah Deniz field. As Turkmenistan's authorities consider, the United Nations can and ought to protect international projects from "political, economic, ecological and man-caused risks".
By the way, the UN supported a special resolution initiated by Ashgabat which is a "reliableand stabile transit of energy carriers and its role to ensure stabile development and international cooperation".

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