Last week Ashgabat hosted the annual Oil and Gas of Turkmenistan-2012 Conference, with more participants attending this year than last year. Participants included representatives of energy companies and governments from around the world. At the conference, Turkmenistan announced that it is ready to begin extracting gas from Galkynysh, the second largest gas field in the world, for transport to Europe and Asia along transit routes that circumvent Russia.. The two new pipelines slated for construction will deliver Turkmen gas to India and Pakistan via Afghanistan, and another will run through the Caspian to Europe; both projects are being promoted by the US.
The additional gas extracted from the Galkynysh gas field could be routed to China to bring the total volume of Turkmen supplies to 65 billion cubic meters (a figure raised in Turkmen-Chinese negotiations this past July), as compared to the current 30 billion. However, present talks between Russia and China could play a decisive role in such a decision, A. Badalova from Trend News Agency writes. If China negotiates a better rate with Russia, then the volumes ordered from Turkmenistan may drop (or not increase). If that is the case, Turkmenistan would have more gas available to send to Europe –however, the infrastructure for delivery is currently not in place, but could be with the construction of the Trans-Caspian pipeline.
US Deputy Assistant Secretary for the Bureau of South and Central Asian Affairs, Lynne M. Tracy, said at the conference that Turkmenistan, Azerbaijan, and the EU are negotiating an agreement to build the Trans-Caspian pipeline to export Turkmen gas to Europe. ”We confirm the proposition that if Turkmenistan and Azerbaijan agree on a pipeline that crosses only their territorial waters, no other country has veto power over that decision," she added. The prospects for the Trans-Caspian pipeline seem promising, in light of Azerbaijan’s industry and energy minister Natig Aliyev’s recent statement about Baku’s interest in the pipeline and Azerbaijan’s readiness to consider the transit of Turkmen gas through its territory.
At the conference, the EU send a delegation, and the Special Representative for Central Asia, Patricia Flor, expressed the EU’s readiness to be a client for Turkmenistan’s energy supplies a. Other conference participants, such as the Energy Adviser of the Foreign Ministry of Great Britain, Angus Miller, and Qatar’s Minister of State for Foreign Affairs, Khalid Bin Mohammad Al Attiyah, stated their countries’ intentions to seek opportunities within Turkmenistan’s developing energy sector.
With international partners lining up in Ashgabat for energy partnerships or to be clients of Turkmenistan’s supply, Turkmenistan does present risk as a reliable partner given its history of having mercurial and non-transparent leadership. These concerns may be seen in Turkmenistan’ gas supplies to neighboring Iran which have been fitful. For the second time in the past five years, Turkmenistan has cut supplies to Iran during the cold season. The reasons are unclear, with Iran’s Petroleum Minister claiming to the Iranian media that the cut in supplies was a result of a breakdown in negotiations on purchase conditions. Turkmenistan’s energy officials claimed that supplies via the Artyk-Lyutfabad pipeline were suspended at the behest of Iran due to repair work. Gas supplies from Turkmenistan to Iran reportedly resumed upon completion.
The riskiness of operating in Turkmenistan’s energy sector is also evident by the recent investigation by Turkmen law-enforcement into oil companies, both local and foreign, operating on the coastal areas of the Caspian. In September, a Balkanabat court t sentenced eight oil field experts to lengthy prison terms and confiscated their property for allegedly causing millions of dollars of damage. Though little information about the case is available from this opaque country where independent journalists are not given the freedom to work, and in which domestic media tends to serve as the mouthpiece of the state and its respective departments, observers on the ground have reported that the investigation was launched and initiated by the management of the state concern Turkmennebit (Turkmen Oil), which is trying to shift responsibility for losses and damage due to its own negligence onto other companies, including foreign ones such as Dragon Oil (UAE) and Petronas (Malaysia).