Turkmenistan Keeps the Balls in the Air on Trans-Caspian, TAPI Pipelines
The Trans-Caspian Pipeline seemed to move closer to reality with talks earlier this month in Brussels among the European Union, Turkmenistan and Azerbaijan, but so far there is only the semblance of momentum. As we have seen before with these negotiations for many years, the EU is over-optimistic, Azerbaijan is upbeat but imprecise, while Turkmenistan is quite circumspect. Despite headlines indicating progress, all the Turkmen media indicated on March 10 was "active discussion" about building the Trans-Caspian pipeline and "substantial" talks at the tri-partite meeting in Brussels where a draft framework agreement was only "reviewed.”
As a report from the semi-official turkmenistan.ru indicates, at a cabinet meeting on March 9, Yagshygeldi Kakayev, director of the omnipotent Presidential State Agency for Management and Use of Hydrocarbon Resources, merely reported on "progress made at the Brussels meeting," and President Gurbanguly Berdymukhamedov said obliquely that because of its huge hydrocarbons reserves, "Turkmenistan is steadily increasing its presence on the world's major energy markets."
Meanwhile, Azerbaijan's Minister of Industry and Energy Natik Aliyev spoke of two documents that the three parties would eventually sign -- a political agreement to support the southern gas corridor and an intergovernmental agreement on the construction of the pipeline. regnum.ru reported March 10. But he put off the signing of these documents as late as the end of the year. As far as is known, a new feasibility study commissioned in 2011 by Azerbaijan's SOCAR is not yet ready.
Perhaps an indirect indication of the lack of tangible results or firm deadlines is that the Russian media didn't appear to react with any belligerent statements from the Kremlin; the Fund for Strategic Culture said only that the parties were "preparing a nasty surprise for Russia.”
When the EU got the mandate for talks on the Trans-Caspian last September, Günther Oettinger, European Commissioner for Energy said that "Europe is speaking with one voice." Yet Italy’s Eni, Électricité de France, and Germany’s Wintershall are already cooperating with Russia on the competing South Stream pipeline.
For the Europeans, the Trans-Caspian seems to be in the category of "nice to have" if they can avoid too much resistance from the Kremlin, and for the Turkmens, what's important is merely to move the ball down the court slowly but never definitively in order to bargain for better conditions from its main customers -- China, Iran, and Russia.
In that regard, Berdymukhamedov's trip to Ukraine this month -- the first of a Turkmen leader in ten years -- was also more about building symbolic strategic allegiances alternative to Russia than actually making any precipitous moves.
No documents were signed and the only visible deal is that Metinvest, Ukraine’s biggest steelmaker, expects to get a contract to supply Turkmenistan with about 300,000 tons of large-diameter pipes, Bloomberg News Service reported March 14, citing Kommersant-Ukraine.
Ukraine was likely only using Berdymukhamedov to bargain for lower gas prices with Russia, said Mikhail Sheynkman of Voice of Russia. Writing for Nezavisimaya Gazeta on March 16, Yury Korolchuk, an expert for the Institute for Energy Research said the real purpose of Berdymukhamedov's trip was to talk Ukrainian president into actively opposing Russia’s South Stream pipeline. Korolchuk believes Turkmenistan wants Ukraine to put public pressure not only on Russia but the EU, and wants to build the Trans-Caspian to escape dependency on China. But ever since its independence, Ukraine has been talking to Azerbaijan and Turkmenistan about "direct" delivery and it hasn’t budged because of the need for Russian transit agreement, said Korolchuk.
Vladimir Kornilov of the Ukrainian branch of the Institute of CIS Countries said dryly that direct gas delivery from Ukraine to Turkmenistan "is only possibly by plane"; Ukrainian parliamentary opposition member Sergei Pashinskiy suggested blimps, Rosbalt-Ukraine reported.
More seriously, Ukraine offered assistance with Turkmenistan's East-West pipeline which could hook up to the Trans-Caspian some day. Viktor Chumak of the Institute for Public Policy told Nezavisimaya Gazeta (NG) that Ukraine could help with technology, labor forces and even construction of another pipeline alternative to Russia. NG also hinted that Turkmenistan might even purchase defense technology from Ukraine.
A delegation from Turkmenistan headed by Foreign Minister Rashid Meredov was in Washington this past week to meet with Secretary of State Hillary Clinton, Special Envoy for Eurasian Energy Richard Morningstar and other officials and oil company executives.
A State Department spokesperson said today, “We continue to support the Trans-Caspian Pipeline and understand the European Union, Azerbaijan and Turkmenistan are still negotiating” the project.” While the spokesperson declined to provide specifics on Morningstar’s meetings with the Turkmens, “energy diversification continues to be a regular topic when we engage with our Central Asian counterparts.” As for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, the US “welcomes renewed efforts to move forward which is an attestment to the political will and commitments of the partner countries, and the project could provide tremendous economic benefits for the countries involved.”
Daniel Stein, senior advisor to Morningstar, said several US oil companies are interested in TAPI, trend.az reported March 23. The State Department spokesperson declined to specify the companies, saying only that “with private sector investment and leadership from international oil companies, potential benefits are significant.” A number of energy executives met with Meredov at a dinner sponsored March 22 by the US Turkmen Business Council. Among major companies already active in Ashgabat are Chevron, which was promised an off-shore drilling permit in 2010 and has still has received it; ConocoPhillips, ExxonMobil and others.
Meanwhile, Pakistan's Business Recorder said on March 26, "The TAPI gas pipeline often makes headlines, shortly after there is some progress on the IP [Iran-Pakistan] pipeline" -- which is opposed by the US due to its sanctions against Iran. TAPI faces all kinds of hurdles, but before it faces the worst ones from warlords in Afghanistan, it has to get through the thicket of disagreements about transit fees. Pakistan has just rejected Afghanistan's demand for in-kind payment of gas for transit fees, the Tribune reported. Pakistan, Afghanistan and India will soon hold meetings to "finalize" a uniform transit fee which they've discussed since signing the framework agreement in December 2010.
Turkmenistan appears to have put more effort into TAPI than the Trans-Caspian. The Asian Development Bank continues to indicate it will fund the 1,680 kilometer $7.6 million project as a "peace pipeline." For the US, TAPI fits into a program for a "New Silk Road" of prosperity for its troubled and even antagonistic partners in the war against the Taliban, following planned withdrawal of US troops in 2014. Yet Turkmen officials were circumspect about the meetings in Washington, saying only that cooperation on TCP and TAPI have to be “studied,” trend.az reported March 24.
By Catherine A. Fitzpatrick