Turkmenistan is once again at the focus of Central Asian energy geopolitics. While the country’s capital Ashgabat hosted its annual international forum Oil and Gas of Turkmenistan – 2011, President Berdimuhammedov embarked on a quick succession of visits to Pakistan and China. In mid-November, he visited Islamabad to keep Turkmenistan in the game for entering the fast-growing energy markets of Pakistan and India. Only a week later, he went on a four-day visit to Beijing, Guandong and Hong Kong, where he agreed to expand the volumes of natural gas supplied to China. Turkmenistan’s strategic push to diversify its gas exports has already produced shifts in the power balance in Central Asia and beyond.

BACKGROUND: On November 14, Berdimuhammedov was received by Pakistani President Asif Ali Zardari, and conducted negotiations with the Pakistani government and ministry of petroleum and natural resources. While a whole range of issues was discussed during the visit, including the post-war reconstruction of Afghanistan and improving bilateral trade and business ties, the question of joint infrastructure projects in energy dominated the agenda. Among the final documents of the meeting, a joint declaration on a gas sales purchase agreement was signed where the parties reportedly settled on the price of gas to be shipped from Turkmenistan to Pakistan via the proposed TAPI pipeline. This almost 1,700 kilometer-long pipeline, with the planned throughput capacity of 33 billion cubic meters per year (bcm/y), would carry natural gas from Döwletabat, in south-eastern Turkmenistan, via Afghanistan to Pakistan and India, ending up in Fazilka, Punjab, near the India-Pakistan border. The gas pipeline framework agreement for the TAPI project, the cost of which is estimated to reach up to US$ 7.6 billion, was inked at the Ashgabat four-country summit earlier in 2010.

On November 22 to 25, Berdimuhammedov visited China where he attended the ceremonial opening of the second line of China’s West-East gas pipeline which brings Turkmen gas to the most populated regions of southern China. While in Beijing, Berdimuhammedov, recently appointed Honorary Professor of Beijing University, and his counterpart Hu Jintao, also concluded an agreement on the supply of additional volumes of natural gas from Turkmenistan to China. This agreement was supposed to provide for an increase of the volumes of Turkmen gas to be supplied to China by 25 bcm/y, raising the volumes of the Turkmen gas contracted by China to 65 bcm/y in total. In addition, a package of other intergovernmental documents were signed during the Beijing summit, among them a further loan deal relating to China’s development of Turkmenistan’s onshore gas fields with respect to the recent gas discoveries at the super-giant gas deposit of South Yolotan (renamed Galkynysh by Berdimuhammedov shortly before the visit to reflect its expected extraordinary role in Turkmenistan’s revival), which Turkmenistan claims to be the world’s second largest natural gas deposit containing officially up to 26.2 tcm of gas.

IMPLICATIONS: The latest diplomatic tour by the Turkmen leader is part of Ashgabat’s long-term export strategy aimed at securing diversified access to the world’s energy markets; a push which has gained an impetus over the years since Berdimuhammedov took over power in late 2006. Thus, in late 2009 Turkmenistan opened a new gas pipeline to China through the territory of neighboring Uzbekistan and Kazakhstan, substantially widening the room for maneuver of Central Asian gas producers vis-a-vis their main energy consumers, first of all Russia. In early 2010, a second small-diameter interconnector from Turkmenistan to neighboring Iran was commenced; allowing Ashgabat to expand its gas exports southwards up to 20 bcm/y in total. Furthermore, the TAPI gas pipeline project aside, other alternative export routes are being explored by Ashgabat, the most advanced being the much discussed energy supplies westwards through the proposed trans-Caspian gas pipeline, the Caucasus and Turkey with the intention for the Turkmen gas to reach Europe through the EU-backed Southern Gas Corridor. Ashgabat’s relations with Moscow, which had been in control of virtually all gas exports from Turkmenistan ever since its independence in 1991, remain tense since the spring of 2009, when Moscow unilaterally stopped imports of Turkmen gas for most of that year, citing a technological incident on the main Central Asia-Center gas pipeline as a reason, and since 2010 Russia’s contracted volumes of Turkmen gas are at a historically low level not exceeding 10 to 12 bcm/y.

The latest concluded gas deals are likely to have repercussions for the strategic equilibrium far beyond Turkmenistan’s borders. The deals first of all confirm China’s growing presence in Central Asia’s energy sector. Despite the fact that upstream development in Turkmenistan does not proceed as quickly as expected and for 2011 Turkmenistan’s gas exports to China most probably will not exceed 15 bcm, China has in the course of the last year already assumed the status of Turkmenistan’s main trading partner thanks to its increased involvement. China’s increasingly assertive entry into the competition for Central Asian hydrocarbon resources, including Turkmenistan’s vast and largely untapped gas reserves, has inevitably undermined Russia’s long monopsony over the region’s main export asset, a control which had proved instrumental to Moscow’s maintenance of its status as an energy superpower. Given the high complementarity of China’s and Central Asia’s national economies, the ongoing energy cooperation is also conducive to the advancement of their economic integration, leading in effect to China’s balancing Russia’s influence over the region. In addition, securing access to natural gas from Turkmenistan fosters China’s bargaining power vis-a-vis Russia when it comes to bilateral talks on the possible implementation of joint energy projects. Moscow and Beijing have been at odds over the price of Russian gas to be supplied from West Siberia to China through the proposed US$ 14 billion gas pipeline Altai. Having gained access to Turkmen gas, China will have one less incentive to concede to terms offered by Russia.

Repercussions can also be expected south of Turkmenistan’s borders. While it is obvious that the future of TAPI is still far from guaranteed, given the need to sort out the remaining technical aspects of the project such as the price of the gas supplies to India or the terms of the gas transit, and, most importantly, the security of the pipeline in the turmoil-torn Afghani and Pakistani regions along the proposed route, the latest envisaged Islamabad gas sales purchase agreement is a major blow to Russia’s key ally in the Middle East, Iran, as well as to its attempts to establish a gas cartel controlling most Eurasia’s markets. The gas price that Islamabad was recently able to agree with Ashgabat (69 percent of the Brent crude parity price) is reportedly significantly lower than the price negotiated with Iran, which competes with Turkmenistan to secure access to the same gas markets on the Indian subcontinent. This gives Islamabad more leeway when negotiating the terms of gas purchases through the proposed Iran-Pakistan gas pipeline with Tehran, which is already weakened by tightening international sanctions.

CONCLUSIONS: Against this backdrop, the recent diplomatic activity of Turkmenistan with the aim of diversifying its energy exports must be seen in the context of an increasingly stiff international competition for Central Asia’s hydrocarbon resources, as manifested by the quest for control over the export transportation routes from this geographically landlocked region. Given its huge possession of gas reserves and its pivotal location, Turkmenistan is becoming the focal point of the emerging energy geopolitics in Central Asia. The continuing reorientation, which is already apparent and pushed further during Berdimuhammedov’s latest visits to Pakistan and China, of Turkmen gas exports away from Russia may thus be indicative of possible further shifts in the main energy flows in large parts of Eurasia.

AUTHOR’S BIO: Jan Šír is a Research Fellow with Institute of International Studies at Charles University in Prague. He is co-author of the Silk Road Paper Dismantling Totalitarianism? Turkmenistan under Berdimuhamedow (Washington, DC: Central Asia-Caucasus Institute & Silk Road Studies Program, 2009).