Saturday, December 24, 2011

Turkmenistan Looking for Path To Europe, Even Through Russia....

Turkmenistan Looking for Path To Europe, Even Through Russia....

Roman Larionov

The main purpose of his visit to Moscow, Turkmen President Gurbanguly Berdimuhamedov on the fate of the Trans-Caspian gas pipeline. Its construction, which is actively supported by the EU may weaken Russia’s position on European gas markets.

Aspects of cooperation

During his visit to Moscow, met with President Berdymukhamedov , Dmitry Medvedev andVladimir Putin . The discussions focused on Russian-turmenskie economic relations.According to Putin, last year trade turnover between the countries has grown by 33 percent. It is “a very good indicator,” said the Russian prime minister and stressed that Russia is pleased to “positive dynamics”. In turn, Berdimuhamedov wished Putin wins the presidential election of 2012.

The Russian prime minister also focused on issues of energy cooperation in a deteriorating situation on world markets. He said that “we have common interests of suppliers, and it’s very good that you and I are in constant contact and coordinating our joint efforts.”

However, the Trans-Caspian pipeline issue at the moment is a complicating factor in the bilateral dialogue.

Window to Europe to Turkmenistan

Due to the nature of its geographical position the energy-rich Turkmenistan denied the opportunity to sell their treasures to the world’s major markets – Europe and the rapidly developing Asian countries. With more than 70 percent of the GDP generated by exports of oil and gas. Until now, virtually the only channel of distribution of the main product was the Turkmen Soviet-built pipeline “Central Asia – Center” that connects the fields of Turkmenistan, Uzbekistan and Kazakhstan, with the central regions of Russia.

In this situation, Turkmenistan is looking for other shipping options for its gas to potential buyers. The most attractive of them are European consumers, long seeking to ensure that the South Caucasian and Central Asian gas has become full-fledged competitor to Gazprom.

Began to appear different projects to deliver gas from oil fields in Azerbaijan and Turkmenistan to Europe bypassing Russia. One of the most likely scenario is the construction of a pipeline under the Caspian Sea and its connection with the gas pipeline “Nabucco”. This year, the Commission received a mandate to negotiate directly with Ashgabat and Baku for this project.

Thus, Turkmenistan will be able to negotiate with the Europeans on the price of its gas without the mediation of Russia, which is now a buyer of Turkmen gas. Moreover, this project creates a lot of other perspectives: new markets among the transit countries (Georgia, Turkey, Bulgaria), as well as the possibility of access to the sea, followed by transportation of natural gas in liquefied form.

The position of Russia

It is clear that Russia is opposed to this project. Apart from the fact that Gazprom is risking a serious competitor in the markets of Europe, which will inevitably reduce the price and volume of purchases of Russian gas, there may be other equally significant consequences.

First, Russia will lose its status as a transit country – but it is not only an economic but a political tool. Secondly, the construction of the Trans-Caspian gas pipeline lobbyists will play into the hands of “Nabucco” pipeline, occupancy of which in this case the increase. In this project “Nabucco” construction reduces the chances of strategic importance to Russia “South Stream”.

Despite considerable success in the northern direction (run “Nord Stream”), Russia still had to lead a bargain – the economic and political – to transit Ukraine and Belarus. In this situation, “South Stream” while that is further complicated by the fact that in the final stages of negotiations took place “hitch” with Turkey.

In turn, Moscow is acting in respect of the Trans-Caspian project in two ways – legal and economic.

Uncertainty concerning the legal status and delimitation of the Caspian Sea area of ​​responsibility in this case is against the Trans-Caspian gas pipeline.

Russian lobbying rules according to which any large-scale projects in the Caspian zone must be approved by all Caspian littoral states (the “Convention on the legal status of the Caspian Sea”). However, at this moment, this idea has not received the approval of the partners, because of what hampered the further process of delimitation in the Caspian Sea area of ​​responsibility (in particular, was foiled planned for this year’s summit of Caspian states).

In addition, Russia is ready to make significant economic concessions to Ashgabat.Probably, at this meeting Russia will make Turkmenistan an attractive offer – an increase of purchases of Turkmen gas. Back in 2008, Gazprom committed to purchase from Ashgabat 80-90 billion cubic meters. m of gas a year and gave the European price.

But after an explosion on a gas pipeline “Central Asia – Center” in the spring of 2009 the purchase of Turkmen gas ceased. They were restored only in 2010, but since Moscow buys only about 10.5 billion cubic meters. meters of gas per year, causing serious damage to the Turkmen budget. Under these conditions, an increase in purchases of Turkmen gas to Russia would be beneficial to Ashgabat. The extent to which Moscow is ready to increase procurement officials did not say. The signed in December 2009 the Russian-Turkmen gas agreement specified ceiling – 30 billion cubic meters. m per year.

Clearly, this amount of Turkmen gas to Gazprom will create difficulties for its sale. And in the face of declining purchases by European buyers of Russian gas corporation can do to stay in a big minus. However, in the current strategic plan costs may result in large benefits.

Parallel to this, Russia is promoting the construction of the Caspian gas pipeline route is virtually identical to the route of gas pipeline “Central Asia – Center”. It will significantly increase gas purchases by Russia and thus become, though indirectly, but rival Transcaspian gas pipeline.

Other problems Trans-Caspian

However, the Trans-Caspian, but rejection from the Russian side, there are lots of other problems. First, this political conflict between Turkmenistan and Azerbaijan over the ownership of oil fields with reserves of Kapaz 100-150 million tons.

Second, the Turkmen gas may be of interest to China. In this case, European buyers will be a serious competitor, but to work on two “fronts” Turkmenistan is unlikely to be able to.Third, there are certain difficulties connected with the fact that the environmental risks of the Trans-Caspian gas pipeline is not clear. After all, the Caspian Sea is a closed body of water.

This argument may have an impact on the behavior of European countries in which the strong position of the environmental movement. Thus, the Trans-Caspian pipeline prospects still remain vague – and Russia has the time to promote his project “South Stream”, which is a more advanced stage than the “Nabucco” and, especially, Transcaspian.

Source: Radio Russia

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