• 5 minutes 'No - Deal Brexit' vs 'Operation Fear' Globalist Pushback ... Impact to World Economies and Oil
  • 8 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 12 minutes Will Uncle Sam Step Up and Cut Production
  • 1 hour Recession Jitters Are Rising. Is There Reason To Worry?
  • 26 mins Danish Royal Palace ‘Surprised’ By Trump Canceling Trip
  • 1 hour China has invested btw $30 - $40 Billon in Canadian Oil Sands. Trump should put 10% tariffs on all Chinese oil exported into or thru U.S. in which Chinese companies have invested .
  • 8 hours US Shale Economic Impact: GDP gain realized in shale boom’s first 10 years
  • 3 hours Used Thin Film Solar Panels at 15 Cents per Watt
  • 1 hour A legitimate Request: France Wants Progress In Ukraine Before Russia Returns To G7
  • 8 hours Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 12 hours Tit For Tat: China Strikes Back In Trade Dispute With U.S. With New Tariffs
  • 11 hours Philadelphia Energy Solutions seeks to permanently shut oil refinery - sources
  • 8 hours Iran Is Winning Big In The Middle East
  • 7 hours Strait Of Hormuz As a Breakpoint: Germany Not Taking Part In U.S. Naval Mission
  • 6 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 7 hours Domino Effect: Rashida Tlaib Rejects Israel's Offer For 'Humanitarian' Visit To West Bank
Alt Text

Kurdistan’s Massive Gas Reserves No One Knows About

The announcement of independent driller…

Alt Text

Gas Flaring “Running Rampant” In The Permian

Gas flaring in the Permian…

ISN Security Watch

ISN Security Watch

ISN Security Watch was a geopolitical news publication run by ISN ETH Zurich.

More Info

Premium Content

Turkmenistan’s New Energy Policy Shows a Clear preference for China and the West

Turkmenistan, so key to the energy plans of so many, had long shown its readiness to break Russia's stranglehold on its gas and oil exports. But Ashgabat has offered few hints as to who it prefers as an alternative.

That changed last week, when President Gurbanguly Berdymukhammedov gathered energy officials together on August 12 and outlined, in much more detail than usual, the country's export-diversification policy.

It's a strategy that is pioneering in its calls for increased cooperation with Western companies, unambiguous in its preference for deals with China, and surprising for its failure to even mention traditional energy partner Russia and the EU's Nabucco gas-pipeline project.

The general idea, according to Turkish energy analyst Mehmet Seyfetdin, is for Turkmenistan to increase its pool of energy partners without angering Moscow. "Turkmenistan wants to show a counter-balance policy in its foreign relations, and we see that Turkmenistan wants to prevent Russia's pressure on it," Seyfetdin says.

Seyfetdin says that if Turkmenistan wants leverage in its dealings with Russia, "it needs the Western countries -- especially the United States." But Ashgabat is being cautious not to appear to be leaning too far toward the West. "To prevent misunderstandings, [Turkmenistan] also signed some agreements with the Gulf countries, which also are in close relationships with U.S. companies," the Turkish analyst explains.

Italy gets a foot in the door

The most sensational news may have been Berdymukhammedov’s instructions for a new production-sharing agreement to be worked out that would allow a foreign company in on the development of the Nebit-Dag oil and gas field in western Turkmenistan.

Upon inking the deal, the Italian company Eni would become only the second foreign company -- after the China National Petroleum Corp (CNPC) -- to have an onshore contract in Turkmenistan.

It is not unheard of for Turkmenistan to work with foreign entities on the development of offshore resources, but for Western companies, securing such contracts has traditionally been difficult.

Discussing the development of Turkmenistan's Caspian shelf, Berdymukhammedov indicated a willingness to loosen things up, saying bids from the U.S. companies Chevron, TX Oil, and ConocoPhilips, as well as the United Arab Emirate's Mudabala, were being considered.

Berdymukhammedov also made clear that in terms of export routes, Turkmenistan was looking south.

Officials were instructed to "take all necessary measures" to ensure that arrangements for gas to be sold via the proposed TAPI (Turkmenistan-Afghanistan-Pakistan-India) pipeline will be worked out by the end of the year. Those plans would have to overcome the instability in Afghanistan that has thwarted the TAPI project for the past 15 years, however.

The need to boost gas supplies to Iran was also mentioned, although Berdymukhammedov did not specify if he was talking about new gas exports or fulfillment of existing contracts.

The biggest consumer of Turkmen gas to the east -- China -- was by no means forgotten.

The Turkmen president named China, already contracted to purchase some 40 billion cubic meters (bcm) of gas annually, as his preferred source for a $4.18 billion loan that would allow for the development of the country's largest gas field, South Yolotan. With estimated reserves of 4 trillion-14 trillion cubic meters, South Yolotan could potentially meet the European Union's gas needs for more than 20 years.

The Turkmen government has yet to say who, if anyone, it would involve in developing the field or which direction the gas would flow, but China would appear to have the inside track.

China provided Turkmenistan with a $3 billion loan last year for developing South Yolotan, and the provision of another $4 billion for the completion of the project's first stage would put China in an enviable position when the time comes for Ashgabat to decide on consumers and partners for the project.

Russia left out in the cold?

The most glaring absence from Berdymukhammedov's plans is Russia, which has extensive control of the Soviet-era export pipelines on which Turkmenistan depends, and which just two years ago was buying some 40- 50 bcm of gas, accounting for about 90 percent of Turkmenistan's exports.

That, however, was before Russian-Turkmen gas relations soured at the start of 2009 due to a price dispute, and took a nasty turn in the spring when the main pipeline carrying Turkmen gas to Russia exploded. After that, supplies stopped completely, and the blame game began.

Russia eventually worked out a new deal, but it called for only a quarter of what Turkmenistan used to supply.

Berdymukhammedov's failure to mention Russia can be taken as a sign that relations have not improved and that Turkmenistan is looking beyond Russia for customers.

Aleksandr Yakovlev of the RosBusiness Consulting Agency suggests, however, that this is just business as usual. "The suppliers, the owners of the minerals, owners of the resources are inviting a significant number of transcontinental, transnational corporations, world megagiants, into partnerships," Yakovlev says.

The same is true for those seeking to buy energy resources, he says. "The consumers are trying to find among these numerous suppliers, on a competitive basis...those suppliers of resources who are offering more advantageous conditions," Yakovlev says.

Another key player left out of Berdymukhammedov's plans was the European Union-backed Nabucco pipeline project, a 3,300 kilometer initiative intended to bring some 31 bcm of gas to the EU annually. Many believe the project is not possible without Turkmenistan’s participation as a supplier. But none of the companies Berdymukhammedov mentioned were shareholders in the Nabucco project.

Just a day after Berdymukhammedov's speech, however, came a sign that the Turkmen president intends to make good on his calls for diversification, and that Europe's energy needs would not be forgotten.

In Baku on August 12, the first Turkmen oil was loaded into the Baku-Tbilisi-Ceyhan pipeline. The oil came from Turkmenistan's Cheleken field in the Caspian Sea, and most of it will eventually reach the EU. It was a modest start, just 36,500 barrels, but plans call for supplies to increase to nearly 1 million barrels monthly.

By. Guvanch Geraev and Gozel Khoudaiberdiyeva of RFE/RL

Download The Free Oilprice App Today

Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play