Home >> Former USSR >> Central Asia  Email  Print Turkmenistan's Diversification Efforts Aaron Beitman - 10/15/2010 For a century and a half as a backwater outpost of the Russian and Soviet empires, Turkmenistan's primary role was to supply the imperial center with raw materials and labor. Though Turkmenistan's increased global presence today is driven by raw materials exports, primarily natural gas, export schedules are no longer dictated exclusively by Moscow. To Russia's chagrin, this process appears to be accelerating as Turkmenistan deepens energy ties with China, Turkmen gas exports to Russia decrease, and progress is made on the ambitious Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline complex. Nevertheless, Russia will not quietly accede to China's incursions into its “backyard,” which may result in new challenges for Turkmenistan.
FINDING THE ENERGY
Upon gaining independence in 1991, Turkmenistan became free to determine its political and economic trajectory, though freedom was not on the agenda of the country's first post-Soviet president, Saparmurat Niyazov. Known as Turkmenbashi, or Father of the Turkmen, Niyazov instituted a vast cult of personality and dominated nearly all aspects of Turkmen society. His successor, Gurbanguly Berdymukhammedov, has eliminated some of Niyazov's more eccentric legacies, like the large golden statute of Niyazov in central Ashgabat that rotated with the sun. Berdymukhammedov has, however, maintained many of the troublesome features of his predecessor's rule. Opposition political activity remains virtually nonexistent, non-governmental organizations are few, and cultural life is almost wholly directed by the government. Turkmenistan's internal isolation, however, has not been matched by external solitude. For all its domestic quiesence, Turkmenistan has increasingly ventured out into the international political economy as a supplier of that which is in great demand: natural gas.
XINJIANG OR BUST
Under Niyazov's foreign policy of “positive neutrality,” which persists under President Berdymukhammedov, Turkmenistan has developed ties with Russia, China, India, Iran, the EU, and the U.S. Unsurprisingly, these relationships are pursued out of common interest in energy. Estimates place Turkmenistan's proven natural gas reserves at 7.94 trillion cubic meters (tcm), while a 2008 audit conducted by the energy services company Gaffney, Cline and Associates concluded that the country's top three gas fields, Yolotan, Osman, and Yashlar, hold between 4.25 and 15.5 tcm.
Under Niyazov, Turkmenistan made halting steps towards export diversification, beginning with the construction of an 8 billion cubic meter (bcm) pipeline to Iran in 1997. However, ten years passed before Niyazov made substantive moves to ease Turkmenistan's overwhelming reliance on Russian export pipelines. Eight months before his death in 2006, Niyazov signed an agreement to begin construction of an export route to China snaking through the restive province of Xinjiang. After some initial questions as to whether the project would continue under President Berdymukhammedov, construction plowed ahead and on December 13, 2009, President Berdimuhammedow and his Chinese counterpart, Hu Jintao, officially opened the pipeline. Beginning in eastern Turkmenistan, the pipeline runs 1833 km (1138 miles) through Uzbekistan and Kazakhstan before reaching Xinjiang. Under the original agreement, the pipeline is designed to reach full capacity of 30-40 bcm by 2012. While Turkmenistan will be the lone supplier at first, Uzbekistan and Kazakhstan have signed contracts to contribute up to 10 bcm each. Though natural gas currently provides only roughly 4% of its energy needs, China’s central planners are pragmatically searching for ways to fuel the country’s continued economic growth. To this end, China recently indicated that it wishes to increase natural gas imports from Central Asia to 60 bcm, by way of a second pipeline.
AN ANTI-RUSSIAN REVOLUTION?
Until China formed its alliance, Russia had Turkmenistan’s export routes locked up tightly. With the exception of Turkmenistan’s modest gas pipeline to Iran, Russia was buying 40-50 bcm of Turkmen gas per year, accounting for 90% of the country’s output, until 2008. Turkmenistan’s reliance on Russian-dominated Soviet-era pipelines meant that Moscow could purchase Turkmen gas cheaply and sell to thirsty European customers with a healthy mark-up. However, Turkmenistan-Russia relations soured in early 2009 due to a price dispute, while the mysterious April 2009 explosion of the Turkmenistan-Russia gas pipeline caused a rupture between the countries that has yet to be repaired.
Although Turkmen gas supplies to Russia did resume in late 2009, a new deal increased prices and decreased volume to nearly a quarter of what it had been previously.
Also in 2009, Russian plans to build Turkmenistan’s much needed “East-West” domestic pipeline also fell through. While President Berdymukhammedov flew to Moscow in March 2009 to discuss Russia’s involvement in the East-West pipeline, he left without an agreement. This was largely due to Russian demands that the entire gas volume from the pipeline, roughly 30-40 bcm per year, would be the major source for the Russian-backed South Stream gas pipeline, running from Russia’s Black Sea port of Dzhubga to Bulgaria and Italy. The South Stream route would compete with the Western-supported Nabucco pipeline carrying Eurasian gas across the Caucasus to Turkey and then to Europe, but Turkmenistan’s wariness about committing to South Stream raises serious questions about the project’s viability. Moreover, President Berdymukhammedov has suggested that Turkmenistan may contribute gas to Nabucco, but continued obstacles to laying a crucial pipeline across the Caspian Sea to Azerbaijan suggest that President Berdymukhammedov’s talk of Nabucco may be just that.
AFGHANISTAN AND BEYOND
As export diversification will only continue to lessen Russia’s leverage over Turkmenistan, President Berdymukhammedov has sought to resuscitate the long-dormant Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. Planning for TAPI began in 1995 and continued even as the Taliban expanded control over Afghanistan. Supported by the U.S. government, the now defunct California-based oil company Unocal pressed forward as leader of a consortium chosen by the Taliban to construct the Afghan portion of the pipeline. However, extensive human rights violations and terrorist connections dampened the Clinton Administration’s enthusiasm for cooperation with the Taliban and Unocal dropped out of the consortium in 1998. After the Taliban’s overthrow in 2001, discussions over TAPI restarted and by July 2002, Turkmenistan joined Afghanistan and Pakistan on a steering committee of oil and gas ministers to oversee TAPI’s development. In 2008, India officially entered the picture and the four countries signed an initial framework agreement outlining project development.
After a flurry of recent diplomatic activity, President Berdymukhammedov paved the way for energy ministers of the four countries to sign an updated agreement on TAPI in September 2010. According to a 2008 Asian Development Bank study, construction of the 1680 km would cost $7.6 billion and would have an annual capacity of 33 bcm. Although continued instability in Afghanistan and tension between Pakistan and India have great potential to derail recent progress, President Berdymukhammedov has demonstrated sustained commitment to realizing this ambitious project.
2010: TURKMENISTAN’S COMING OUT PARTY?
2010 has found Turkmenistan making good on its interest in energy export diversification. Expanded cooperation with China and progress towards building the TAPI pipeline has emboldened Turkmenistan to free itself from Russia’s iron embrace. Turkmenistan even built a new pipeline to Iran in January 2010, which more than doubles exports to its southern neighbor. With technical support from eager international energy companies, Turkmenistan appears to have made great strides in achieving its diversification goals.
The rosy picture of increased international cooperation, multiple export routes, and overflowing state coffers may not be what it seems. Turkmenistan understandably seeks alternatives to Russian pipelines, but long-term energy relations with China may prove equally as troublesome. China can be a hard bargainer and appears to lack to the strategic interests Russia has long maintained in Central Asia. As a result, Russia may resort to alternative means of securing Ashgabat’s cooperation, which may not be everyone’s best interest.
Nevertheless, 2010 will be a watershed year in Turkmenistan’s post-Soviet history. Increased international exposure, efforts to court partners from Beijing, Baku, and Brussels, and a willingness to risk Russia’s wrath suggest that Turkmenistan seeks greater global influence. While the country’s careful cultivation of relations with all comers has been reasonably successful thus far, diverse partnerships can make for a diverse set of challenges. It was a party this year, but a hangover may very well be in Turkmenistan’s future.
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