Ashkhabad appeared to be a periphery on Gasprom world map.
“Gasprom leaves Turkmenistan: gas purchases reduce by quarter in a country rich with oil. Ashkhabad that lost Russia as a main Turkmen gas partner is looking for new buyers. These might become China and Iran.
fter explosion of gas main, Russia that was purchasing 50 billion m3 gas has stopped import in April. Gas main is restored, but supplying has not started yet. Moscow and Ashkhabad could not come to an agreement on volume of supply and gas price. Russian Concern that incurs losses due to reduction of consumption at main market reckons that Turkmen gas is expensive luxury.
Ashkhabad was incurring losses in amount of billions of USD, but none of these countries wants to concede. Without price concession, purchase of Turkmen gas was losing any sense for Russia, as according to the documents Middle East gas is supplying near and faraway markets with the international transit status. Gasprom does not require Middle East gas for provision of local market, as the fuel is sold at the rate regulated by state. Two parties came to an agreement in autumn. It was supposed that Russia would purchase 30 billion m3 of gas from Turkmenistan; Ashkhabad would have 20-30 billion m3 of gas left. Commercial negotiations have not been started yet and it seems that this might never take place. Gasprom is planning to decrease gas purchase in Turkmenistan in the nearest three years in comparison with pre-crisis period, says newspaper “Vedomost” in Nov-24-2009 edition. According to the data provided by the newspaper purchase of Middle East gas in 2010-2012YY decreases Gasprom’s import volume to 10.5 billion cubic meters in a year. However, former partners have not signed the agreement yet. Thus, old buyer has left and now Ashkhabad will have to seek new markets.
In the pre-crisis period, Turkmenistan was mining 70 billion m3 gas. It was selling 50 billion m3 in Russia and 8 billion m3 in Iran. According to the BP data, Turkmenistan produced 66.2 billion m3 gas, while the figure decreases to 40 billion m3 in 2009 and this is the best variant.
Turkmenistan declared that it plans to thrice increase gas supply in Iran, and double the capacity of existing gas mains in the country (14 billion m3). Moreover, Turkmenistan plans to open second pipeline that provide Iran with 6 billion m3 gas in 2010. Fuel will pass to Dovletabad that is the main resource market for Gasprom. Ashkhabad is planning to open pipeline to China with the capacity of 40 billion m3 of gas. Pipeline will have parting in India through Pakistan and Afghanistan.
Beijing issues multibillion USD credit to Ashkhabad for mining of gas field. The only foreign company that holds a license for mining of gas field in Turkmenistan is Chine National petroleum Corp. Therefore, China and Iran will fully replace Russia in a few years and become the main trade partners for Turkmenistan. According to Bloomberg assessments after cessation of gas import from Turkmenistan, Gasprom has saved $3.4 billion only in the second quarter. The expenses of concern were reduced twice. Refusal on purchase of fuel in Turkmenistan enabled concern to concentrate on mining of gas inside the country. Therefore, presumable price for Turkmen gas is above $220 per 1000 m3 gas, while European price is $300.
According to BP data, Turkmenistan has tripled gas reserves to 8 trillion m3 in 2008. Ashkhabad is holding fourth place after Russia, Iran and Khatar according to this data. Ashkhabad is planning to increase its reserves even more and it is basing Southern Iolatan. The volume of this gas field might be 4-14 trillion m3 according to British company Gaffney, Cline and Associates. Thus Turkmenistan is the country with biggest gas reserves in whole world. Despite the fact that gas existing was doubted. American oil company Chevron has already shown interest toward this.
It seems that export of mentioned gas in Europe is non-profitable. Scandal with Turkmen pipeline was beneficial for Gasprom. However Russian concern is not willing to decisively decline the contract. There are several reasons for this. If talking in military terms Russian monopoly considers Turkmenistan as some “height” that might be conceded for some time, but it cannot be abandoned so that rivals not to take it into their possession. Thus, Gasprom is induced to consider expenses on Turkmen gas in its calculations.
China and Iran are no competitors for Russia as they are importers not exporter countries, moreover, as they are contenders for European market. Russia does not consider Iran as a sales country. But China must become sales market for Russian gas in the future.
It is obvious that the only rivals for Gasprom are European companies and pipeline Nabucco that exists only on paper. European Union hopes for Turkmen gas that might fill Nabucco pipeline. However, until Ashkhabad does not prove that it can produce more gas and the figures are static over the years Nabucco stakeholders have nothing to do there. It seems that Moscow will fully buy Ashkhabad’s excessive gas and thus impedes Europe to strengthen in the region. If considering constant arguments between Azerbaijan and Turkey concerning gas supplying of Europe (that gives advantage to Gasprom) one cannot name Nabucco’s future closed in mist.
Gas conference held in Ashkhabad should have clarified Turkmenistan-Russia relations. Turkmen president seeks protection against Russia in United Nations and Europe. At the forum held under the aegis of UN, Turkmenistan leader clearly supported Europe’s Nabucco project that implies new routs of gas supply. In the beginning of this year, European Parliament approved trade agreement with Turkmenistan at the first hearing. This event was preceded by eleven years of fierce debates concerning obligatory reform in human rights in Turkmenistan. One of the participants of forum, Igor Sechin emphasized economic malfunction of Nabucco project and named five corresponding principles: agreed legal norms, resource bases, ecological and technological safety, economically grounded transportation rates and long-term contracts with suppliers. Russian vice-premier declared that Turkmen gas transit will be restored as soon as “seller and buyer will come to an agreement”. At the same time, Russian newspaper “Vremia Novostei” has published information that Brussels managed to influence Bulgaria so that the country declined to sign obligatory agreement with Russia on “Southern Stream” project – rival of Nabucco project. In relation with this fact, the prime-minister of Russia, Vladimir Putin has postponed planned visit to Bulgarian capitol.
Russian experts reckon that risks threatening Nabucco project – “Liberator of Europe from Russian gas” – are much greater than that of Northern Stream. Big portion of Turkmen gas is already appropriated in advantage to Europe. However, strained situation remains around Iran’s atomic program. Therfore, this might be resulted in full decline of Iranian branch and in this project is losing any sense. On the other hand, China pipeline project is not a yesterday one and European Union still remains supporter of Nabucco project. This considers capacities of Egypt and Iraq. Europe is still afraid of Gasprom that in the end might be advantageous for Nabucco. Southern Stream and Nabucco are arguing on gas consumer, while Russian project can satisfy Europe’s demand without Turkmen gas, while European pipeline cannot, say Russian experts. They add that Nabucco project suffered damages as despite all the arguments Russia still has huge influence on Turkmenistan. However, Russians do not forget that if European Union receives alternative offer on gas supply from Qatar, then Nabucco project will be unable to decline.