The latest chapter in the Great Game saga has been opened with a landmark agreement to build a gas pipeline linking Turkmenistan with Russia. The accord is widely seen as a blow to the interests of US and western Europe, which had hoped that Turkmen gas would be channelled through a western-backed trans-Caspian Sea pipeline that would bypass Russia.
The agreement was signed by Russian president Vladimir Putin, Kazakh president Nursultan Nazarbaev and Turkmen president Gurbanguly Berdymukhammedov in mid-May in the port city of Turkmenbashi in Turkmenistan. Previously, Uzbek president Islam Karimov had signed off on the deal to build the pipeline, which will run from Turkmenistan to Russia, passing through Uzbekistan and Kazakhstan en route.
Roland Nash, head of research at Renaissance Capital in Moscow, says: “This agreement definitely sends out the message that Russia is the dominant force in central Asia.” He adds that while the agreement is a coup for Russia, it is not necessarily a blow to western interests. “Anything that helps to get oil and gas out of central Asia is positive for Europe and the US as it will help to push down global energy prices,” he says. The pipeline accord will be of tremendous benefit to Russian gas company Gazprom, which is struggling to fulfil growing demand for gas from western Europe on the back of falling production volumes at home.
Under a 25-year agreement signed in 2003, Turkmenistan is committed to supplying Russia with 50 billion cubic metres of gas a year, a figure that will rise to 80 billion cubic metres by 2028. At present, Russia imports Turkmen gas at $100 per 1,000 cubic metres and sells it to western Europe at $250. Turkmenistan therefore enables Gazprom to run a highly profitable export business while simultaneously supplying the Russian market with cheap domestic reserves.
According to the BP Statistical Review, Turkmenistan has 2.9 trillion cubic metres in gas reserves, the fifth highest in the world. However, the Turkmen authorities in the capital Ashgabat claim that the true figure is as much as 10 times higher, which would make it an even bigger player in global energy.
Western majors have not given up on securing a share of the riches to be made in the central Asian republic. Senior officials from Chevron of the US recently met Berdymukhammedov in Ashgabat, where they were told that the Turkmen government would welcome Chevron’s participation in exploration and development of the Turkmen sector of the Caspian Sea.
