Will Europe Pay Turkmenistan's Price

Will Turkmenistan Overcome Hurdles to Open Pipeline to Europe?

The official Turkmen government web page, Turkmenistan: The Golden Age ran a major editorial signed by Turkmenistan's Ministry of Foreign Affairs (MFA) on October 19 regarding what it calls the "European vector," part of its policy of diversifying energy sales and delivery among a variety of customers. It articulates a public response to the European Union's offer to purchase natural gas -- but never mentions the word "Nabucco" and despite its brave face, can't help but indicate the considerable obstacles on the way to building the Trans Caspian Pipeline.

"There are complex geopolitical processes under way," says the MFA, delicately referencing its reduced relationship with Russia and new friendship with China. And "new schemes and configurations for delivery of energy that will directly affect the development and prosperity of certain states, regions and entire continents," says the editors.

Diversification is described not merely as a political necessity, given the worsening of relations with Moscow over gas price disputes and a gas explosion in 2009 -- varying the customers is considered simply good international business. In this editorial and in other articles, Ashgabat styles itself as a major global player magnificently dispensing its energy resources wisely and fairly, given the growing needs of European and other consumers in a world still dependent on fossil fuels. Given its geographic location between East and West, and its considerable resources -- now estimated by the British firm Gaffney, Cline & Associates to be as much as 26.2 billion cubic meters of gas -- Turkmenistan finds it justified to grow its export potential and find the shortest routes to market.

"This is a normal and absolutely justified position from all respects for any energy-producting state wishing to strengthen its own economic and energy security, which responsibly regards the defense of its own national interest."

Diversification is more than just a commercial project, however, the editors intone. Bringing Turkmenistan's gas to market is also able "to stabilize the global economy, security it from imbalances and deformations and secure, on the basis of health competition, a balance of interests of all participations on the international energy market."

"Obviously, the time for monopolies in this segment of the world economy has receded into the past," says Turkmenistan -- referencing the long hold Russia's state monopoly Gazprom has had on the region's pipeline corridors. Yet Ashgabat tries to frame this move not as ditching a long-time customer, but expanding its customer base -- Russia still buys 10 bcm and could potentially buy more.

Then Turkmenistan signals its priorities: "Besides the existing routes in the northern direction (Russia), and south (Iran), in late 2009 a strategic gas pipeline was constructed from Turkmenistan to China." Next, the state editors describe the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline as "in a stage of active preparatory work" -- although it continues to address issues ranging from price to security.

Then to Europe, which is last on the list and least specific of all, yet still positive: "Recently, the process of substantive discussion has significantly activated regarding construction of a pipeline in the European direction, signifying the beginning of a practical realization of a new and greatly promising vector of Turkmenistasn's energy strategy.

"The mutual interest of Europe and Turkmenistan in the energy sphere appear natural and well-founded economically," says the editorial. With Europe's larger market and growing demand of half a billion people and one third of the world's industry. Turkmenistan says "European states and companies are offering mutually profitable terms for partnership and rationalized prices for delivery of raw materials" -- and this accords with Turkmenistan's approach.

But can they agree not only on the price Europe will pay for Turkmenistan's gas, but possibly considerable European investment in Turkmenistan's infrastructure, as China has done? The editorial references the memorandum signed between the EU and Turkmenistan in May 2008, the creation of a working group, the EU's new mandate achieved in September to conduct takls on the construction of the Trans Caspian pipeline and "the start of a negotiations process with the participation of the interested parties in drafting a document in which principle positions related to the deliveries of natural gas from the Caspian region to Europe will be clearly defined." So -- more meetings, more talks.

But there's a spoiler -- Russia -- which is reacting "inappropriately" to this "normal, civilized process of cooperation between sovereign subjects of the energy market with equal rights," says the MFA. Russia has raised environmental concerns, but Turkmenistan finds them hypocritical, given their absence in other seas where Russia has pipelines, and facetious, given the modern requirements all energy companies face to attend to environmental impact.

Russia -- and Westerners, for that matter -- have also raised the issue of Turkmenistan's failure to come to an agreement with Azerbaijan on the demarcation of their mutual border in the Caspian sea bed. Turkmenistan admits this dispute has gone on for two decades, but hasn't hindered shipping, fishing, and even mineral extraction, and is confident an agreement will be reached. Here, it insists on the principle of bilateral decision-making, and not the multi-lateral process that Russia has demanded.

The MFA says it is "puzzled" by Russian resistance to Turkmenistan's closer cooperation with the EU, and calls it "counterproductive." The Turkmen government gets through the editorial without ever mentioning the word "Nabucco," and we see it will have enough trouble getting the Trans Caspian into the ground.

Yet Ashgabat has put down a marker: "the realization of the Trans Caspian route is dictated not by political competition, not by a desire to harm anyone's interests, but the objective needs of economic development of the country, and real mutual profits for all the participants of the project based on grounded evalutions of the domestic resource base."

Originally published by EurasiaNet.org.