2010-01-13 | Aleksandra Jarosiewicz

Last month marked the symbolic completion of processes which have radically changed the model of gas exports from Turkmenistan as well as the geopolitical situation in the region. The most important changes include the launch of new gas export routes to China and Iran, resulting in a diversification of Turkmenistan's export routes, and the end of the heated phase of the conflict between Russia and Turkmenistan, which had gone on for nine months, and was ultimately resolved in a manner unfavourable to Gazprom.
As a result of those events, Russia has been reduced to just one of many actors competing for Turkmen gas, while China and Iran have gained importance as the new buyers. Another loser, apart from Moscow, is the West, whose room for manoeuvre has shrunk considerably as a result of the involvement of Beijing and Tehran, the two actors who will import most of Turkmenistan's gas this year. The fact that new routes have been built also exposes the ineffectiveness of Western efforts to gain access to Turkmen gas, although it does not completely rule out the prospects of gas exports going westward; launching west-bound gas exports still depends on the actions of the West. The new situation is definitely favourable for Turkmenistan, which having diversified its markets, may now charge full market prices. In addition, co-operation with multiple strategic partners will boost Ashgabat's political stature.
 

Russia loses its monopoly on gas imports from Turkmenistan
 
The gas pipeline to China, with a probable capacity of 13 billion m3 a year (and a target capacity of 40 billion m3, to be attained in 2012), was launched on 16 December. 6 January marked the official inauguration of the gas pipeline to Iran with a capacity of 6 billion m3 (target capacity of 12 billion m3, to be attained in 2010), which complements an existing route with a current capacity of 8 billion m3 of gas a year. The two new routes diversify Turkmenistan's gas exports and diminish the importance of the hitherto dominant Russian direction.
On 22 December, Turkmenistan and Russia signed a gas deal ending the conflict which started in April 2009 and led to the interruption of gas supplies from Turkmenistan to Russia. Under the deal, Gazprom may buy a maximum of 30 billion m3 of gas a year at a price based on European prices. However, the contract probably does not specify the guaranteed minimum volume of supplies; Gazprom has announced that it would buy around 10 billion m3 in 2010.
Despite the Kremlin's efforts, the question of the East-West gas pipeline – an internal Turkmen route to be built to supply gas from the gigantic Yolotan field to the Caspian shore – remains unresolved. Gazprom has been seeking to establish control over this route, which it hopes to use for gas supplies to Russia via the projected Caspian pipeline, and on to Europe. This runs counter to Western plans to launch exports to Europe via the East-West pipeline and onwards via the projected Trans-Caspian gas pipeline across the Caspian Sea to the Caucasus.
 

Consequences
 
The launch of the new routes has changed the original model of gas exports from Turkmenistan – in 2010 most of Turkmenistan's gas will go to countries outside the CIS, namely Iran and China, which have hitherto been of marginal or no significance. With greater gas supplies from Turkmenistan, Iran may be able to increase the volume of gas supplies to Turkey (the Turkish energy minister participated in the inauguration of the gas pipeline to Iran) and on to Europe (swap operations with Turkmen gas are also possible). In the medium term, Iran, Russia and China may start to compete over Turkmen gas supplies unless gas production increases in Turkmenistan, which depends primarily on how fast development on the Yolotan field proceeds.
 
The biggest loser in the new situation is Russia, whose April 2009 gas blackmail, namely the refusal to collect Turkmen gas, has turned out to be counterproductive. The Kremlin has lost its monopoly on gas imports from Turkmenistan, which had been its main instrument of political influence on Ashgabat, and has unintentionally contributed to the construction of the gas pipeline to Iran (the decision to build that route was taken in July 2009).The deal concluded in December which ended the conflict is unfavourable to Gazprom, as the Russian monopoly has agreed to pay a high price for gas it does not need in the short term because of lower demand in Europe. Neither does the deal guarantee the quantity of supplies to Gazprom (30 billion m3 a year) in the medium term, when demand in Europe is expected to rise. This is because of the competition from China and Iran, and uncertainty concerning the pace at which gas production will rise in Turkmenistan.
 
The new model of gas exports has also changed the geopolitical balance of power in the region – it marks the failure of the policies of Russia, but also of the West (the USA and the European Union); the latter has failed to start gas supplies from Turkmenistan to Europe independently of Russia and Iran, despite nearly twenty years of efforts. China and Iran have considerably strengthened their position in the region, at the expense of Russia and the West, who had wasted time in grappling with each other. This does not mean, however, that the prospects of gas exports from Turkmenistan to Europe have been completely undone; Turkmenistan is still interested in this direction (and in the Trans-Caspian and Nabucco pipelines), provided that Western companies accept the conditions Ashgabat has laid down. However, in any case, the West will be only the fourth direction of gas exports from Turkmenistan (in terms of volume as well as importance), and will not balance out the others. In the future, Moscow will probably continue to sabotage plans to export Turkmen gas to Europe independently of Russia, as may be illustrated by the attempt to take control over the East-West gas pipeline announced by Russian president Dmitry Medvedev during his December visit to Ashgabat.
 
Turkmenistan is the main beneficiary of the new situation: the newly launched routes diversify export routes and markets for Turkmen gas, and thus permit Ashgabat to charge higher prices. In their view, co-operation with the new strategic partners is also meant to enhance Turkmenistan's security. Paradoxically, however, this rise in geopolitical importance will be a challenge for Turkmenistan, which is now certain to remain an area of rivalry between the major players in the region.
 

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