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Source: www.asiaecon.org |

TURK'GAS'ISTAN: THE NABUCCO PROJECT


  Gaffney, Cline & Associates (GCA), a British consultancy firm , announced its first results of its Turkmen gas reserves audit in Turkmenistan's capital, Ashkhabad. It stated it's low estimate under the established international and classification system, where a minimum 4 trillion cubic meters of gas, and as much as an astonishing 14 trillion cubic meters were discovered.


 

Gaffney, Cline & Associates (GCA), a British consultancy firm , announced its first results of its Turkmen gas reserves audit in Turkmenistan’s capital, Ashkhabad. It stated it’s low estimate under the established international and classification system, where a minimum 4 trillion cubic meters of gas, and as much as an astonishing 14 trillion cubic meters were discovered.

 

Obviously, the gap between Turkmenistan, and energy giants such as Russia and Iran is narrowing down. Both Russia and Iran are listed as having the world’s largest and second-largest gas reserves at 48 trillion cubic meters and 26 billion cubic meters, respectively. With this recent discovery, Turkmenistan will have reserves just 20% lower than that of Russia, and will by far surmount Iran’s.

 

It is quite clear that the map of energy sources is being reshaped. October 13 stood out as a watershed in the race for Caspian energy. Turkmenistan being a late runner, jumped all the way from the back of the racetrack to the forefront. This sudden transformation of Turkmenistan as it quickly became a leader amongst its former competitors such as Russia and the West, comes as a shock to the rest of the world. An energy boost was all that was needed for Turkmenistan to make it all the way to the front lines, an energy that all its competitors desire.

 

Both, Turkmenistan and Russia, have been strategic allies in gas supplies. The two countries have an agreement regarding gas prices and the volume of gas supplies for 2007-2009. Ashkhabad has been able to withdraw increasingly higher prices from Russia for its gas supplies. In 2007, the price was raised to $100 per 1,000 cubic meters from the lprevious $65. Then it was further raised to $130 for January-June 2008 and to $150 in the second half of 2008.

Gazprom, Russia’s energy giant, satisfies around 80% of Europe’s demand for gas, which constitutes 70% of the company’s profits. Gazprom sells close to two-thirds of Russia’s 550 bcm annual gas production in the rapidly growing domestic market, compelling it to secure Turkmen supplies in order to meet the contracted European commitments. This has left Ashkhabad in a favorable situation, allowing it to manipulate Russia into getting higher prices for its own gas.

 

Russia needs to revisit its entire strategy towards unifying a world gas market and come to terms with the fact that a “multipolar” world of gas producing countries is shaping up. The seeds of a gas cartel have been planted and is slowly germinating to become a multi branched network of gas producers. The news of such happenings are definitely welcomed with an embrace by the European capitals, while leaving some signs of disappointments in Russia.

 

The Nabucco gas pipeline proposal, introduced by the European Union and backed by the United States, is currently Russia’s number one concern on its energy policy agenda.  The Nabucco project will considerably reduce Europe’s dependence on Russian gas supplies. The Nabucco projects aims at dispatching Caspian gas to the European market via an energy hub in Turkey, bypassing Russian territory. However, Nabucco’s feasibility depends on the accessibility to Turkmen gas supplies.

 

Meanwhile, the Nabucco project proposal came at a time when Russia and Europe were struggling to initiate the South Stream project, which aimed at further tying Russian-European energy cooperation. This has left Russia in a very awkward situation. Especially, now that Turkmenistan indeed does have the capacity to feed Nabucco with all the gas it needs.

 

Russia has been effectively using energy as an instrument for pursuing political and strategic dominance. With the emergence of a new energy superpower, the “co-relation of forces” within the commonwealth of Independent States will undergo a major change. This will not apply to Russia only, but will also affect other countries whom have been considering themselves leading energy players in Central Asia and the Caspian.

 

Clearly, now is the best time for Washington to seize this opportunity and push for the conclusion of the trans-Caspian gas pipeline projects.  With all these latest developments, the US is given the opportunity to place itself back into the race for Caspian energy after being outsmarted repeatedly by Russia in the past years.

 

However, the heart of the matter is that the U.S., Russia, and the European Union all failed to examine the situation closely. If one is to picture the situation on hand in terms of a strategic war field, the USA, Russia, and EU are not the only players. There is yet another energy hungry player watching the illuminating Turkmen gas fields from the east - China.

 

The Trans-Asia Gas Pipeline Company Ltd, a subsidiary of PetroChina and China National Oil and Gas Exploration and Development Company, has already started building a $2.6 Billion Central Asia-China gas pipeline that connects Turkmenistan’s gas fields with China. Ashkhabad is already committed to delivering up to 40 bcm of gas annually to China.

 

China is a latecomer in Turkmenistan but it has already overtaken the West and is only second to Russia in that country. U.S. analysts overlooked the fact that China was very serious about its investment in Turkmen gas,  thus the U.S. considered Turkmenistan’s cooperation with China as an instrument used by Ashkhabad to bargain for a better deal with the West.

 

Source: www.asiaecon.org |


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