EU, Turkmenistan Stand Together Over Trans-Caspian Pipeline
NEFTE Compass, 20.10.2011
Turkmenistan and the European Union are forming a united front in the face of worsening ties with Russia over the construction of a trans-Caspian gas pipeline.
The two new allies, plus Azerbaijan, which would be on the receiving end of a pipeline from Turkmenistan, held their latest meeting in Brussels last week and sources close to the process say the EU's target, albeit an ambitious one, is to get the presidents of Turkmenistan and Azerbaijan, Gurbanguly Berdimuhammedov and Ilham Aliyev, over to Brussels before the end of the year to sign a tripartite agreement with the EU on the project.
One European consultant described the push for the trans-Caspian as "the most adventurous initiative the EU has ever taken outside its borders." It also has the rare distinction of being one of the very few foreign policy objectives that have won a mandate from all 27 EU states, underlining the importance that Europe attaches to diversifying its gas supplies away from a heavy reliance on Russia (NC Sep.22'11).
At last week's Brussels gathering, the head of Turkmenistan's State Agency for Management and Use of Hydrocarbons, Yagshygeldy Kakayev, met European Energy Commissoner Gunther Oettinger and an Azeri delegation. Also present was Christopher Ross, a senior official from the EU's Directorate General for Energy, who has been in charge of coordinating contacts and ties between the three sides.
Kakayev was accompanied by two members of the legal department of state gas company Turkmengas. "It was basically a meeting of a working group to consider the legal aspects of building a trans-Caspian pipeline," said one diplomatic source in Brussels.
In a nutshell, Moscow believes the EU is interfering in the region because all decisions affecting the Caspian Sea should be agreed by all the five littoral states – Russia, Kazakhstan, Iran, Azerbaijan and Turkmenistan. Ashkhabad and Brussels, on the other hand, believe that if two states that share a maritime boundary – as Azerbaijan and Turkmenistan do – want to build a pipeline between themselves, then it is purely a bilateral affair. As far as Turkmenistan is concerned, the only wider consideration for the sea as a whole concerns the protection of the environment, and Ashkhabad believes it has ticked that box satisfactorily.
Emboldened by the EU's resolve to square up to Russia, Turkmenistan this week said it was "bewildered" by Russia's "weak arguments" and "counterproductive" position over the trans-Caspian pipeline, and pledged to continue cooperating with its "European partners ... in a businesslike and constructive way."
Ties between Ashkhabad and Moscow have deteriorated sharply since a 2009 explosion on a pipeline that halted Turkmen gas sales to Russia for eight months (NC Nov.4'10). Russian mobile phone provider, MTS, a subsidiary of the powerful Sistema group, was kicked out of Turkmenistan at short notice earlier this year and Turkmen industry sources say Russian contractor Stroitransgas is unlikely to get another project in Turkmenistan after finishing the Turkmen end of the Central Asian gas pipeline to China. A new crackdown on Turkmen citizens with dual Russian nationality is currently souring ties even further.
Turkmenistan has in the meantime turned to China, and Turkmen leader Berdimuhammedov is due to visit Beijing in November to formalize an additional Chinese loan for $4.2 billion agreed earlier this year and to discuss a possible increase in gas sales to a whopping 60 billion cubic meters per year by 2015 – six times as much as Russia, the previous number one customer, is currently buying (NC Mar.10'11).
The biggest obstacle to building a trans-Caspian pipeline remains the longstanding dispute between Turkmenistan and Azerbaijan over their maritime boundary. The EU has been trying to convince both sides to set the issue aside for the time being and come back to it once the pipeline is up and running. But Turkmenistan believes that once the pipeline is in place, it will lose leverage over the maritime dispute. It believes the EU is so desperate for Turkmen gas that it will pressure Azerbaijan into accepting a resolution of the dispute that favors Turkmenistan. But even if the EU were open to such a course of action, analysts point out that Brussels has little leverage over Azerbaijan. The only gain that Azerbaijan would have in allowing Turkmen gas to transit its territory would be to charge lucrative commercial tariffs.
Turkmenistan is currently "curious" to see the outcome of the fight between rival pipeline options to transport gas to Europe from the second stage of Azerbaijan's Shah Deniz field, believing that it will be a blow to the trans-Caspian if the large, EU-backed Nabucco pipeline is not chosen, a diplomatic source said.
EU relations with Moscow have been marred by raids on Gazprom offices in Europe but the state gas giant's head Alexei Miller and Eni chief Paolo Scaroni agreed at a meeting this week "to continue with intense work" on the South Stream pipeline, a rival European supply project recently joined by France's EDF and Germany's Wintershall (NC Oct.6'11).
Michael Ritchie, London
