Russia may be about to throw struggling Turkmenistan a lifeline by resuming purchases of its natural gas after a three-year hiatus.
During a visit to the Central Asian nation on October 9, Gazprom chief executive Alexei Miller told local state media that deliveries could begin from next January 1.
Miller was circumspect about volumes and prices, stating that more negotiations would be held at the “technical level,” but he said that an agreement would be reached in the “very near future.”
In the broader picture, Turkmenistan is clearly hoping this development could serve as the impetus for further and much-needed economic cooperation.
As has been the case elsewhere with Russia, energy disputes tend to mirror the broader state of diplomatic relations. When Gazprom more than halved its purchases of Turkmen gas to 4 billion cubic meters in 2015 and then stopped buying the gas altogether the following year, it contributed to driving Turkmenistan’s economy further into the lurch. Ashgabat was left heavily exposed to reliance on China, which pays bargain amounts for Turkmen fuel imports.
So the resumption of gas sales could inject a shot of amity into what has been a cool relationship for some years now. At least that is what Turkmen President Gurbanguly Berdymukhamedov appears to believe.
In a telephone conversation with Russian President Vladimir Putin on the eve of Miller’s visit, Berdymukhamedov spoke about opportunities for diversifying economic relations, increasing and expanding trade, and boosting investment. The specific areas of interest are energy, transportation and, remarkably for those familiar with Turkmen treatment of Russian businesses in this sector, telecommunications.
Clearly, however, energy is where most attention is focused. The two countries are committed to cooperation in the sector under the terms of an intergovernmental agreement that runs through 2028. In an interview with Turkmen state media, Miller described the period in which Gazprom bought no gas from the Central Asian nation as a “commercial pause.”
Looking beyond just gas purchases, the Gazprom chief also expressed interest in getting involved in energy-resource processing and chemical projects in Turkmenistan. Gazprom has already established a solid presence in neighboring Uzbekistan — for example, through its involvement in the 25 Years of Independence natural gas project, which is being developed under a production-sharing agreement by a consortium that includes, among others, Gas Project Development Central Asia (a subsidiary of Gazprom International).
This will all be music to the ears of Berdymukhamedov, but what are the prospects? And is Russian truly interesting in anything other than cheap Turkmen gas to prop up its own sales of fuel to Western Europe?
The bitter experience of one of the largest Russian investors in the country hardly portends great things. As recently as late July, Moscow-based telecommunications giant MTS announced it had filed a case with a World Bank arbitration center for at least $750 million in compensation from Turkmenistan for forcing the closure of its daughter company. The company said Ashgabat acted in violation of international agreements when it forced MTS-Turkmenistan to suspend operations in September 2017.
Given the many potential pitfalls of sinking money into Turkmenistan — such as non-payment for services rendered and the threat of expulsion and expropriation — the Russian government may see limited value in sweet-talking Ashgabat beyond simply playing the spoiler. There is a geopolitical angle here, after all.
With some vague additional sense of clarity over the status of the Caspian Sea having been established since a convention between five littoral states was signed in August, there has been some renewed chatter about construction of a trans-Caspian pipeline. In his address to the United Nations General Assembly, Berdymukhamedov referred obliquely, in a bid for international support, to the pipeline project, which would stand to plug Turkmenistan into the Southern Gas Corridor that runs from Azerbaijan to Europe.
Although it does not look like European nations have exactly sprung into action to energize dialogue on the trans-Caspian project, Russia may be gently reminding Turkmenistan it is a more reliable and dependable option in the short- and even medium-term. The reality is that Turkmenistan’s Galkynysh gas field is so vast that it could potentially meet the requirements of all-comers, but for all Ashgabat’s talk of diversifying its potential markets, its attention span is frequently limited, and hard cash trumps hot air every time.