"FIGHT" FOR CASPIAN TRANSIT

The sudden death of Saparmurat Niyazov, the "Great Turkmenbashi" or the "Caspian Sultan" as he was also called, has caused confusion among many world powers. As a matter of fact, this happened at the very height of energy confrontation between the West and Russia. As a result, the EU has gained hope that the new Turkmen leadership can partly change its orientation towards the West, thus slightly weakening Russia's energy monopoly and acquiring an alternative and rather powerful source of "blue fuel" so much wanted by in European superpowers. In these aspirations, Europe is stubbornly backed by the USA which in this case appears to be more European than the Europeans themselves.

It is no secret that the delaying commissioning of the Azerbaijani gas field of Shah Deniz, which is linked to Turkey by an export pipeline, has caused some anxiety in Europe and malevolence in Russia. 

It goes without saying that the Azerbaijani gas field, however powerful, cannot compete with the world's biggest owner of gas reserves - Russia. But Turkmenistan is another story. This country is among the world's top four countries for the volume of gas reserves. Until recently, when Turkmenbashi was in power, Moscow was confident of its own power because Niyazov did not even think of changing export priorities with regard to selling gas to the west: this was taking place exclusively with the mediation of Gazprom with which an appropriate agreement was signed until 2028. The idea of building the trans-Caspian gas pipeline from Turkmenistan to Azerbaijan was rejected by Niyazov as far back as in 1998. It would appear that things could go on like this indefinitely, but … In all likelihood, it is not ruled out that this project has been shelved prematurely and can still come out of the "coma". 

Food for thought …

The new Turkmen president, Gurbanguli Berdimukhamedov, seems to be a more liberal politician than S. Niyazov. And although it is too early to make conclusions on the political course of the new Turkmen leader, some changes in the country and its foreign policy are already palpable. In fact, it could hardly be expected that President Berdimukhamedov would immediately relinquish his predecessor's policy which produced him as a politician. 

Nevertheless, the policy of greater openness proclaimed by the Turkmen leader has turned out to go beyond mere words. As a result, Ashgabat, which once shut its borders, has reopened them to foreign politicians and negotiators keen on achieving at least partial energy reorientation of Turkmenistan.

Over a short period in office, G. Berdimukhamedov has held more meetings and negotiations with senior Western politicians than S. Niyazov in several years. And the question whether the East Caspian energy transit course has changed has resurfaced on the world's political agenda. 

This has been prompted by the new president. While identifying priorities in the work of the Turkmen government at the first meeting of the new Cabinet of Ministers, G. Berdimukhamedov put foreign policy top of the list. The second most important area is the development of the fuel and energy sector. It is no secret that most negotiations held with foreign delegations mostly concerned issues of cooperation in the development of hydrocarbon resources.

The president told the first cabinet meeting that the country's fuel and energy sector would operate in line with the development plan designed under President Niyazov until 2030. In accordance with the program, the scope of drilling and exploration work, as well as geophysical surveys to study the subsurface geology on the territory of the country, will significantly increase. As for foreign policy, the Turkmen government said it would preserve all agreements with its main oil and gas partners and, most importantly, expressed its readiness for cooperation with all interested countries.

Of course, the Russian orientation of the Turkmen gas had an exclusively political undertone. Turkmenbashi was wary of the democratic West and its political aspirations. He distanced himself from it to the maximum extent, preferring to sell gas to Russia at a certain price without worrying too much about what Russia was selling it for afterwards. This was also in the interests of Russia which turned into a monopoly exporter of its own and Turkmen gas to western and post-Soviet markets.

The new president, who inherited a country with a backward economy and people languishing in poverty, realizes that if "the mountain does not move towards Muhammad, then Muhammad should move towards the mountain himself". It is clear that further complete isolation and dependence on Russia can only last for a little longer. Whereas Western democracy is only several hundred kilometers of Caspian waters away from Turkmenistan now, this situation is likely to change dramatically in the near future, especially if we take into consideration the fact that the Americans are already sitting in Afghanistan and neighborhood with Iran may soon cease to be what it is now. At the same time, the preference of Western markets, which can actually be easily accessed bypassing the Kremlin, is much greater and of longer term than that of Russia.

The new Turkmen leader has to understand, and he certainly does, that the situation in what recently was a quiet Kyrgyzstan, where Moscow clashed with the West, can be repeated in his country as well, especially since the socioeconomic status of the Turkmen people leaves increasingly more to be desired. In other words, the sealed borders cannot serve as a panacea for political cataclysms. At the same time, the slight slant towards the West, based on mutual economic benefit, can insure Ashgabat against the whims of the Moscow political elite. Examples are close at hand: Berdimukhamedov has already realized that the pro-Western political course of many countries in which domestic political situation is far from being democratic does nothing but strengthen the powerful elite.

Azerbaijani "window" to Europe

It can be said with some confidence that the Turkmen president has already shaken off dust from Niyazov's folder called "trans-Caspian pipeline" and has started at least studying its content. He is urged to do that not so much by the Europeans as by America. For instance, the US ambassador to Kazakhstam, John Ordway, suggested that Caspian countries start the construction of the trans-Caspian pipeline now, without waiting for the signing of a five-sided Convention on the legal status of the Caspian. "Russia, Kazakhstan and Azerbaijan are already developing sub-sea resources in the Caspian. Trans-Caspian pipelines also exist … If there are two or three countries which would agree to the implementation of the trans-Caspian pipeline construction project, this will not differ from the situation in which Azerbaijan, Russia and Kazakhstan agreed to develop resources in their respective sectors of the Caspian," the US diplomat said.

His words are confirmed by the Deputy US Secretary of State for Europe and Eurasia affairs, Matthew Bryza. He said that the Bush administration is trying to improve relations with Turkmenistan and hopes to open a "totally new chapter" in relations with Ashgabat. He added that focus in the expansion of Turkmen-US relations would be on cooperation in the energy sector.

Bryza chose a very important moment for the statement - after a recent visit by Russian Foreign Minister Sergey Lavrov to Ashgabat and during preparations for the Turkmen president's first visit to Moscow which was paid on 23-24 April.

In an interview with the British Independent, Bryza indicated that "Russia is buying gas in Central Asia at $100 for 1,000 cubic meters and sells it to European companies at $300" (this boils down to the issue of economic viability the new Turkmen leader has to think about - author). 

According to the US diplomat, one of the main reasons impeding the expansion of Turkmenistan's cooperation with European countries is "the control over energy transportation facilities from Central Asia on the part of Russia". For this reason, Washington is trying to reduce Turkmenistan's dependence on Russia in terms of energy supplies by supporting the construction of the trans-Caspian gas pipeline.

It is worth mentioning that negotiations on the transit of Turkmen gas through this line were held in Ashgabat in the middle of March under the US patronage. In addition to the USA, they were joined by representatives of the UK, Greece and Azerbaijan. Turkmenistan seems to have agreed to transport its gas to European markets via Azerbaijan and Georgia bypassing Russia.

Caspian status 

There is another aspect which seriously delays the construction of trans-Caspian pipelines. At issue is not only the gas pipeline from Turkmenistan. Also on the agenda is the construction of an oil pipeline from Kazakhstan, which was indicated by the US ambassador to Astana, though Kazakh President Nursultan Nazarbayev did decide to join the Baku-Tbilisi-Ceyhan pipeline thus putting a thorn in the side of the Kremlin. Clearly afraid of negative reaction from Moscow, he has been quite skeptical of late with regard to the trans-Caspian project, diplomatically referring to the unresolved nature of the Caspian status issue.

As is known, the problem has been resolved on paper between Russia, Kazakhstan and Azerbaijan on the basis of bilateral agreements on the division of the sea-bed. The position of Turkmenistan and especially Iran has been the main stumbling block. It is obvious that if Ashgabat joins the agreements signed between three post-Soviet republics, Iran will simply be sidelined, especially since Tehran's position on an equal share of the sea for all littoral countries should not be backed by Ashgabat - Iranian version of the division would deprive Turkmenistan of significant offshore fields which were located above the Soviet-Iranian border before the break-up of the USSR.

In connection with this, Gurbanguli Berdimukhamedov's resolution dated 11 April to establish an interdepartmental commission to deal with Caspian issues is a landmark event. After a long break, the commission has started discussing the issue with respective commissions of other four coastal countries.

However, consent of four out of five Caspian countries to use a single scheme does not yet mean an official agreement and signing of the Convention on the Caspian status. Yet, we would like to repeat that de facto the issue will be finalized. Under the current circumstances of its ever-increasing global political isolation, Iran will think twice before making any abrupt moves, as was the case with Azerbaijan when Iranian warships bullied a geological vessel in the southern sector of the Caspian.

Chances still exist 

It is beyond doubt that Gurbanguli Berdimukhamedov's first official visit to Moscow would add to the skepticism of politicians and journalists with regard to the construction of the trans-Caspian gas pipeline to Azerbaijan. However, history shows, including the recent period connected with the Caspian problem, that there is nothing impossible in politics. Who could have expected in 1994 that the Kremlin would almost completely reconsider its position and sign bilateral agreements with Azerbaijan and Kazakhstan on the division of the sea on the basis of the principles insisted on by Baku? And do you remember the skepticism which surrounded the Baku-Tbilisi-Ceyhan oil and the Baku-Tbilisi-Erzurum gas pipelines?

It is clear that supporters of sub-sea energy pipelines have good chances of meeting their objectives in the future. The position of Baku on the issue is more than pragmatic and is fully supported by Europe and the USA - Russia's main adversaries in the post-Soviet political firmament. It is no wonder that Azerbaijani Deputy Foreign Minister Araz Azimov has recently called on European countries to buy Central Asian energy bypassing Russia. "Open, unilateral and, therefore, dangerous challenge to Moscow," many people thought. But if we look more carefully and try to assess the careful and pragmatic policy of Azerbaijan, it will become clear that Baku officials will not make such statements without a reason. Suffice it to say that on the day when the official visit of Gurbanguli Berdimukhamedov to Moscow began, the EU Foreign Ministers Council in Luxembourg started discussing a draft strategy for Central Asia. According to the German permanent representative to the EU, Wilhelm Schenfelder, this strategy is not aimed against the interests of Russia but it does entail the construction of the trans-Caspian gas pipeline.

Of course, Russia will not sit idly seeing a real threat of future economic and political setbacks. The activity of Mr. Berdimukhamedov, who has established a new commission for Caspian talks, seems to reveal Ashgabat's intention to join the trans-Caspian gas pipeline project (this has been repeatedly expressed by Saparmurat Niyazov as well). According to an expert from the Russian strategic research institute, Azhdar Kurtov, Moscow can hamper this only in one way: indicate in the convention that the construction of the pipeline along the sea-bed can be possible only with the consent of all participants. Russia will be backed by Iran and perhaps by Turkmenistan - the only question that will remain outstanding would be the amount of compensation. "Russia could help Ashgabat secure legal rights for disputed fields from Azerbaijan, but today Moscow does not have any real tools of pressure on Baku. On the other hand, it can channel its effort into exploration operations in the Turkmen sector of the sea. This intention has already been voiced by Lukoil," Kurtov said. "On 19 April, Berdimukhamedov invited AFC "System" there, which is very important for Russia. At the same time, there is no pipeline from offshore to the coast, and Moscow may be asked to build it at its own expense." The second important issue is the confirmation of the contract with Gazprom until 2028. In word, President Berdimukhamedov has already done that and only a declaration remains to be signed. "This will help Russia keep Turkmenistan in its gas orbit and perhaps lure Ashgabat to the 'gas OPEC' project," an expert from the Moscow Carnegie Center, Aleksey Malashenko, has said. According to him, conditions for the supplies of Turkmen gas to Ukraine via Russia are likely to be discussed and if the status quo does not change, this will preserve Kiev's dependence on gas supplies from Russia.

Another thing is also clear: Turkmenistan has no intention of confining itself to the Russian transit. Ashgabat has long made it clear that there are other important directions as well. Work is under way to implement the agreements reached with China in 2006. According to a deal between the parties, the Chinese National Petroleum Company (CNPC) will build a gas pipeline to China in late 2008 and in 2009 start receiving 30 billion cubic meters of gas a year for a period of 30 years. The agreement envisages the supplies of gas which CNPC is to find and produce from the right bank of the Amudarya River.

It appears that the first far-reaching conclusions about Turkmenistan's gas future can be made after 13 May, Russian President Vladimir Putin's reciprocal visit to Ashgabat. The president will be accompanied, among others, by Aleksey Miller, the current head of Gazprom…

As far as Azerbaijan is concerned, it does need Central Asian capacities. First, this will significantly increase the profitability of the existing two pipelines. Most importantly, Kazakh oil can be received at the time when Azerbaijan's own reserves will start dwindling. This is when Kazakhstan, where the development of discovered fields and prospects is being delayed and is not expected to commence until 2012-2015, will need additional export capacities. Before Turkmen gas can be received, it is first necessary to reach an appropriate agreement and then build a trans-Caspian gas pipeline, which will take a few years. Besides, the development of oil and gas fields in Turkmenistan is still at an early stage. Therefore, it is now necessary to engage in serious diplomatic work, especially since Western support is almost guaranteed.

If the other side of the Caspian joins Azerbaijan's arteries, this will also serve as protection from political cataclysms, a powerful Western shield which will cover Baku. And in the event of a positive result, Azerbaijan will become the main link, the crucial bridge linking the economic interests of Asian and European continents, with all positive economic and political implications…