Russia Gets Caspian Gas Pipeline Deal

A02382631.jpgThe leaders of Russia, Turkmenistan and Kazakhstan agreed yesterday to build a new natural gas pipeline around the Caspian Sea, a move that bolsters Russia’s dominance over the region’s gas exports. The new pipeline and an accompanying deal to upgrade existing Soviet-era infrastructure deliver a blow to US, European and Chinese hopes of raising the flow of Central Asian gas out of Russian hands.

Although all three former Soviet republics sought to play down the diplomatic implications of the pipe-line, it comes at a time of increased Western anxiety about Russia’s use of its vast energy resources for political ends, a charge Moscow denies.

The agreement was reached at a summit of the three states in the Turkmen Caspian port of Turkmenbashi.

Russian President Vladimir Putin said the deal meant “more supplies of energy resources to Europe and the world’s markets”.

In its first stage, the pipeline will deliver 10 billion cubic meters (bcm) of gas per year by 2009-2010, Russian Energy Minister Viktor Khristenko said.

Including the infrastructure upgrade, deliveries to the Russian border will rise to 90 bcm.

While Turkmen President Kurbanguly Berdymukhamedov said plans for a rival US-backed trans-Caspian pipeline that bypasses Russia had “not been completely dropped”, Khristenko said he believed there was now little chance of it going ahead.

“Technological, legal and ecological risks are so big that it will be impossible to find an investor unless it is a political investor who does not care how much gas there is to pump through,” he said.

The three states issued joint declarations saying they would sign a treaty by September on building the new pipeline and would work with Uzbekistan to improve existing Soviet-era Central Asia/Centre pipelines.

New gas finds in Turkmenistan and a new Turkmen leader following the death in December of President Saparmurat Niyazov had raised the possibility that the country, the largest gas producer in Central Asia, might seek new export routes.

Berdymukhamedov said Turkmenistan still had a long-term interest in diversifying pipelines and listed possible projects with Iran, China, Afghanistan, India, and the trans-Caspian.

The country has not published independent audits of its gas reserves, and asked if Turkmenistan had enough gas for new pipelines to Iran, Afghanistan and China, he said, “Do not worry, there is enough.”

Kazakh President Nursultan Nazarbayev, who last week pledged to keep most of his country’s oil flowing through Russian pipelines, said ahead of the signing, “This is a purely pragmatic commercial project. There is no politics there.”

Russian gas monopoly Gazprom pays Turkmenistan $100 per 1,000 cubic meters of gas that it buys, well below the $250 it charges its European customers. It needs gas from Central Asia to maintain cheap domestic supplies without cutting exports as its own fields mature.

Fyodor Lukyanov, editor of the journal Russia in Global Affairs, said ahead of yesterday’s summit that a pipeline agreement would represent a major diplomatic victory for Putin.

“I think the Americans are at the moment following Putin’s visit to Central Asia with attention, envy and unhappiness,” he said. “If he is able to ensure Kazakh and Turkmen loyalty then the question of alternatives for energy supply to Europe, which is already fairly murky, will just be put on hold.”

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