U.S. Secretary of State Condoleezza Rice said U.S.-Turkmen relations had turned a "new page" as the United States sent 15 delegations to Ashgabat to confer with new Turkmen President Gurbanguli Berdymukhamedov. The June 2006 BP Statistical Review of World Energy estimated that Turkmenistan has 2.9 trillion cubic meters of gas reserves; the country produces roughly 60 billion cu m of natural gas annually, of which two-thirds is exported via Russia's Gazprom.

At issue for any development of Turkmen natural gas resources is the question in which direction should the pipelines run: north, south, east or west?

To the north, Russia's Transneft has the advantage of operating the country's sole current export line, the Central Asia-Center pipeline. Despite U.S. optimism, however, geography seems to dictate that Russia will retain a hammerlock over Turkmen natural gas exports for the foreseeable future.

Russia provides more than 40 percent of the European Union's natural gas needs, and Turkmen gas is essential to its efforts to supply the domestic and export market. As Russia has a monopoly over Turkmen gas exports, it seems unlikely it would be willing to let U.S. investment in to threaten its exclusivity.

Niyazov was hardly happy with his Russian partners, however, as Gazprom paid Ashgabat a fraction of what it subsequently sold Turkmen gas for and frequently cut deliveries in an attempt to jack up prices. The price inequities that so angered Niyazov continue, with Gazprom importing about 42 billion cu m of Turkmen gas annually at a price of $100 per 1,000 cu m, which it then sends onward to European markets for an average price of $250 per 1,000 cu m.

Niyazov also sought alternative markets for his exports and looked southward for his first initiative to break Transneft's stranglehold. In September 1998 Turkmenistan began exporting gas to Iran through the $190 million, 124-mile Korpheze-Kurt Kui natural gas pipeline, Turkmenistan's first pipeline not crossing Russian territory, which has an annual capacity of nearly 300 billion cubic feet. As Turkmenistan pursued an avowedly neutralist international policy, Niyazov was unfazed by threat of sanctions being imposed by Washington under the 1996 Iran-Libya Sanctions Act for his trade with Teheran.

Despite optimistic Western news reports portraying him as a liberal, Berdymukhamedov is to continue his predecessor's policies toward Iran, much to Washington's distress. On Sept. 18 National Iranian Gas Export Co. Managing Director Nosratollah Seifi told reporters in Teheran that Iran's gas imports from Turkmenistan will hit 14 billion cu m in 2008, showing a 6 billion cu m increase.

In his attempts to alleviate Russian domination, Niyazov also looked eastward to China. During his state visit to Beijing in April 2006, the two countries signed a 30-year cooperation contract on Turkmen natural gas exports to China of 30 billion cubic meters annually. Under terms of the contract, a pipeline was to be constructed with exports scheduled to begin in 2009. While many analysts initially dismissed the agreement as yet another negotiating tactic, the project survived Niyazov's death. On Aug. 30, Berdymukhamedov attended at Bagtyarlyk an initiation ceremony for the 4,349-mile, $26 billion pipeline where two segments of pipe, one inscribed with "Turkmenistan," the other, with "Hytay, China" were welded together. The Turkmenistan-China pipeline will be both the longest and most expensive in the world and is being constructed under the auspices of the China National Petroleum Corp.

Washington's hopes for access to Turkmen gas are embodied in the proposed $5 billion, 1,020-mile Trans-Caspian Gas Pipeline. The TCGP project was first suggested by the United States in 1996; three years late, the Turkmen government signed contracts with General Electric and the Bechtel Group for a feasibility study on the proposal.

The TCGP as envisaged would run from Turkmenistan under the Caspian to Azerbaijan and transit Georgia to Turkey, with an initial gas throughput of 565 billion cubic feet annually, eventually rising to 1.07 trillion cubic feet.

The TCGP has run into myriad problems, however, both economic and diplomatic, and the future of the project is uncertain. Negotiations between Ashgabat and the international consortium backing the project have become mired in payment and price issues.

A larger international issue is that 16 years after the demise of the Soviet Union, Russia, Azerbaijan, Kazakhstan, Iran and Turkmenistan have yet to agree to a definitive delineation of the Caspian's offshore waters, resulting in a murky legal twilight zone certain to deter all but the most determined investors. In May, Russian Industry and Energy Minister Viktor Khristenko spoke candidly about the obstacles surrounding TCGP.

"Existing technical, legal, environmental and other risks relating to the trans-Caspian project are so great that it would be impossible to find an investor," he said. "Unless this is a political project, and then it does not matter what would be inside the pipeline as long as it exists."

Despite Washington's wishful thinking, Turkmen natural gas seems destined to be exploited by others for the foreseeable future.

(e-mail: [email protected])

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