What happens when the largest exporter of natural gas in Central Asia (and the fourth largest reserves on the planet) declares its open disagreement with the Russia-led natural gas OPEC? At the very least, it makes for an energy conference of heated diplomacy when heads of state meet in Ashgabat this week, as the Europeans fight for the Nabucco supply route direct to Europe (the word "bypass" is misleading), while the Russians fight for Gazprom's continued total monopoly over the country's exports.We're always impressed with the sophisticated negotiating techniques of the Turkmen leadership, but we've seen them play this game a couple too many times to get very excited about the possibilities for Europe to compete in a normal market in Central Asia alongside the Russians. Turkmenistan's decision making will likely depend three things - who they can get to pay the most, which foreign partners are the least likely to raise any human rights complaints further down the line, and what kind of tolerance they will have for shoddy treatment and hardball tactics from Gazprom (such as blowing up pipelines in response to open tenders).
Gazprom has repeatedly promised Turkmenistan seemingly impossible
prices - literally paying more for the gas than they can sell it for -
which leads some to believe that Moscow has no intention of fulfulling
their contract obligations (and the Turkmen counterparts realize
this). Is it possible that Central Asia is getting tired of the
Russian energy dominance? Kazakhstan, for example, is getting romanced by China,
and its hard not to read into the Turkmen attack on Gazprom as a clear
rebuke and warning that the door will be opened to Europe. As Vladimir
Socor reports in Asia Times Online, an April memo believed to be penned by President Gurbanguly
Berdimuhamedov stated: "A producer
country's sovereign right to choose its energy supply routes is inseparably
linked with its right to set its price for its energy resources. Combining
gas-producing countries into supranational regulating bodies, including price
regulation, is an idea without merit. Direct contracts between seller and
consumer are the only correct model for price formation."
Ouch ... looks like Gazprom might have overplayed its hand there. Let's prepare ourselves for some multibillion dollar rapproachement from the Russians, because they seem to be the only party who realize the enormous strategic importance of Turkmenistan.
Ouch ... looks like Gazprom might have overplayed its hand there. Let's prepare ourselves for some multibillion dollar rapproachement from the Russians, because they seem to be the only party who realize the enormous strategic importance of Turkmenistan.
