Turkmenistan requests a loan from China to survive termination of gas sales to Russia
The peculiar Russian policy in the sphere of gas imports from Central Asia has resulted in Ashgabat's securing financial support from Beijing at a time of exacerbation of relations with Moscow. At a Saturday's cabinet meeting chaired by President of Turkmenistan Gurbanguly Berdimuhamedov, Vice Prime Minister for fuel and energy issues Tachberdi Tagyev reported on his visit to China where he managed to secure an agreement on the allocation of a "special purpose loan in the amount of US $ 3 billion for the commercial development of South Yoloten gas deposits."
Given that Ashgabat has not been exporting natural gas for almost two months now and receiving no cash for it, the Chinese assistance is very timely to help Turkmenistan cover an unexpected deficit in the state budget. As for China, it has consolidated its positions in the competitive fight for Central Asian gas. The construction of a pipeline with the capacity of 30 billion cubic meters (which can be increased to 40 billion cubic meters) from Turkmenistan to China is well under way. It is planned to launch the pipeline early next year signaling the end of the Russian monopoly on the purchase of large amounts of Turkmen gas.
However, Russian authorities and "Gazprom" behave as if this will never happen. First, it was Deputy Chairman of the gas concern board Valery Golubev who said that the decline in demand forced "Gazprom" to impress on Turkmenistan that it should reduce either the volume or price of gas. Last Friday, Vice-Premier for fuel and energy issues, Igor Sechin, having recognized that negotiations on resumption of gas supplies are progressing very slowly, made a statement that Ashgabat will for sure recall one day. "We have not argued (with Turkmenistan - editorial). The situation became conflict as a result of the collapse of the market, not any actions on the part of "Gazprom", he said on the sidelines of the St Petersburg Economic Forum. Turkmenistan must understand it. When they understand it we will have normal relations."
In turn, the Turkmen leader reciprocated to Moscow by the Chinese loan, demonstrating his capacity to do without Russian gas dollars. To all appearances, the President of Turkmenistan is aware of the strength of his position, and he is no longer touching on the topic of Gazprom's cessation of gas purchases from Turkmenistan. A statement of the Ashgabat officialdom on the results of last week's talks with First Vice-Premier of Russia and the Chairman of the Board of Directors of "Gazprom" Viktor Zubkov had no mentioning of the conflict but only the assurances of strategic partnership and personal trustful relations of the heads of state.
At the same time, according to the State News Agency of Turkmenistan, Mr. Berdimuhamedov said last weekend that there was "the need for development of a better scheme of sale of Turkmen energy resources to foreign consumers and the need to bring this scheme in line with the accepted international practice". He also noted that "diversification of mutual cooperation is a fundamental principle of the energy policy of Turkmenistan who is consistently expanding cooperation in oil and gas sector with the world's leading energy powers and large companies."
Russia has historically been the largest buyer of Turkmen gas, and, as of 1 January 2009, it had turned to payments in accordance with the European price formula, excluding the cost of transportation and marketing of fuel. The entire first quarter, despite the catastrophic decline in demand for Russian gas in Europe and the CIS, "Gazprom" did not default on its obligations to Turkmenistan (it was getting gas in the pre-crisis volumes and paying the European price). Moscow hoped that in response to a generous fee Ashgabat would stop looking for opportunities to export gas to Europe bypassing Russia. However, while on a visit to the capital of Russia at the end of March, the Turkmen leader refused to provide such assurances to "Gazprom". This prevented the signing of an agreement on the construction of the trans-Turkmen pipeline "East-West", which would connect fields in the eastern parts of Turkmenistan with the coast of the Caspian Sea. "Gazprom" expected that it would become both an investor and operator of the pipe, and that gas in it would flow via a new Caspian pipeline only through Russia. Mr. Berdimuhamedov returned to Ashgabat and immediately ordered the announcement of an open international tender for the pipeline construction.
After that, Moscow decided to punish Turkmen colleagues by "ruble". "Gazprom" notified "Turkmengaz" of the intention to reduce the intake of gas by four times (up to 27 million cubic meters a day), and non-synchronous actions of controller's officers of the two companies led to the explosion on the Turkmen export gas pipeline near the border with Uzbekistan. The Turkmen Foreign Ministry blamed "Gasprom" for the accident and the conflict is lingering for more than two months without any clear prospect of a solution.
"Vremya Novostei" N 98 (2222) of 08.06.2009