Turkmenistan: Balancing China, Russia, and Europe

As cogently analyzed by Stratfor (subscription required), Turkmen President Gurbanguly Berdimukhammedov’s recent announcement that a pipeline supplying Russia with natural gas from Turkmenistan would be upgraded may just be another effort by the Turkmen leader to string Russia along — for as long as he can — until a better option, most likely China, comes his way.

“…Indeed, two options literally are on their way — new pipelines coming from China and Europe — and Berdimukhammedov seems prepared to ditch the Russians as soon as a feasible opportunity presents itself, and thus move his country out from beneath Moscow’s thumb as soon as he possibly can.

Berdimukhammedov, however, is treading a fine line with Russian natural gas giant Gazprom, which, as the major buyer of Turkmen natural gas, has the power to dictate prices or even reject Turkmen supplies should it feel too unwanted. Hence, should Berdimukhammedov side against Gazprom before another export option is in place, he will have placed his country’s export revenues in jeopardy, not to mention botching his own political future. To say that Ashgabat is terrified of what the Russians will do should it move prematurely is the mother of understatements.

Berdimukhammedov’s chosen path is to promise all things to all people — meaning Russia, China and Europe. After Russia, Turkmenistan is the second-largest natural gas producer in the post-Soviet arena. Its natural gas reserves are estimated at 22 trillion cubic meters, the fifth largest in the world. However, considering its domestic needs and a long history of neglecting its own energy sector, Turkmenistan has only enough natural gas to meet one of those promises.

And so the race is on between the Europeans and the Chinese, both of which are trying to provide Turkmenistan with cash-laden export options it cannot refuse. The Europeans are planning to build a natural gas pipeline that reaches them from Turkmenistan via beneath the Caspian Sea, Azerbaijan, Georgia and Turkey. And the Chinese are building a pipeline through Kazakhstan with the idea of sucking up Turkmen gas. And of course, Russia is jumping in with its own plan to modernize the existing pipeline (it is this last plan that Berdimukhammedov gave his most recent thumbs-up to).

For the Europeans, Turkmenistan could provide perhaps 10 percent of its total consumption, giving the Europeans far more leverage with Russia — by far its largest supplier. For China, it is about introducing natural gas as a major component of its energy mix, making it less vulnerable to the whims of those pesky U.S. carrier battle groups that rule its maritime energy import routes. For Russia it is all about maintaining the coherence of its broad geopolitical strategy….”



This entry was posted on Thursday, November 29th, 2007 at 1:59 pm and is filed under China, Russia, Turkmenistan.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.