14:55 GMT +325 February 2018
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    Moscow seeks to retain positions in Turkmen gas sector

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    MOSCOW. (RIA Novosti economic commentator Vasily Zubkov) - The unexpected death of Turkmen President Saparmurat Niyazov left the Russian government wondering how the event will affect Turkmen gas deliveries.

    Though the Turkmen government said in a recent statement on local TV that "Turkmenistan will honor all commitments under international and bilateral contracts," uneasy days lie ahead for Moscow. In spite of these concerns, the Kremlin expects the new Turkmen government to continue developing bilateral contacts, according to Russian presidential aide Sergei Prikhodko.

    Gas is the main mineral resource in this Central Asian country. According to reports published a few years ago, Turkmenistan's proven gas reserves amount to 22.5 trillion cubic meters. There are plans to increase annual gas output to 120 billion cubic meters by 2010, of which 100 billion cubic meters will be exported. Official reports say that up to 24 billion cubic meters of gas is produced quarterly now. All companies producing gas in the republic are state-owned.

    The country earns several billion dollars a year from hydrocarbon exports, but it could receive much more, Western experts say. However, owing to the transport infrastructure, which dates back to the Soviet era, Turkmenistan has just two direct buyers of gas, Russia and Iran.

    In 2003, Moscow and the government in Ashkhabad signed a 25-year agreement on cooperation in the gas sector. As part of the deal, Russian energy giant Gazprom's export arm, Gazexport, signed a long-term contract with Turkmenneftegaz for the purchase and sale of Turkmen gas for the duration of the agreement. This year, Turkmenistan will deliver 30 billion cubic meters of gas to Russia at $65 per 1,000 cubic meters, while as of January 1 the price will climb to $100.

    In line with Ashkhabad's commitments to Iran until 2018, it should supply up to 7 billion cubic meters of gas annually.

    The deceased Turkmen leader was not happy with his country's dependence on Russia. Several pipeline projects were ready to break ground when he was alive. Among others, there were plans to plug into the Nabucco gas pipeline, which will connect Azerbaijan, Armenia, Turkey and Bulgaria (with branches to Serbia and Montenegro), Romania, Hungary and Austria. The European Union is supervising the project.

    Documents have also been prepared for the construction of a gas pipeline through Uzbekistan and Tajikistan to Southeast Asia (China). The construction of a large pipeline via Afghanistan to South Asian countries is being discussed now.

    President Niyazov skillfully used these projects as trump cards in negotiations with Moscow, seeking higher export prices, since the share of Turkmen gas had been on the rise in the Russian gas balance. In addition, Russian gas pipelines were used for gas transit to the Commonwealth of Independent States.

    Where will Turkmen gas flow in the future? According to Azhdar Kurtov, president of the Moscow Center for International Law Studies and a prominent expert on the Turkmen economy, forecasts for bilateral gas cooperation depend a lot on who will succeed Niyazov. Many people in the former president's inner circle were oriented towards Europe.

    The expert said the United States seems to be behind the Afghan project. However, he added that it is not the number of projects that matters, but whether Turkmenistan will be able to secure large deliveries. No gas output growth has lately been registered, Turkmen old fields are becoming depleted, and new reserves, such as the so-called "Turkmen Shtokman," have not yet lived up to forecasts.

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