The Turkmenistan pivot

Turkmenistan is making the most of its energy resources, courting suitors but withholding pledges of marriage. As inform.kz posted a few days ago,

Turkmenistan is capitalizing on its revamped friendship with Russia as oil deal talks with two Russian firms move forward. A month after the Kremlin convinced Turkmenistan to forego U.S. overtures for a gas pipeline to bypass Russia, media reports have surfaced that Russian private firm Lukoil has agreed to develop three major fields in Turkmenistan. A deal with Russia's TNK-BP could also be under way.

Russia scored a coup in making that deal with Turkmenistan and Kazakhstan, and this deal with Lukoil is evidence of a step or two towards the Russian camp. As Vladimir Socor wrote a couple weeks ago, the deal left the US in the dust.

At their May 11-13 summits in Central Asia, the presidents of Russia, Turkmenistan, Uzbekistan, and Kazakhstan agreed to modernize and enlarge the capacity of gas pipelines that run from the three Central Asian countries to Russia; send growing volumes of gas extracted in those three countries for export to or transit via Russia; and task Gazprom and other Russian companies with developing Turkmenistan’s vast reserves, so as to ensure that future output would also go Russia’s way.

Thus, the May agreements almost certainly seal the demise of the trans-Caspian gas pipeline project for Europe. Concurrently, Kazakhstan agreed to a substantial, long-term increase of its oil exports northward to and via Russia, as opposed to westward routes to Europe via Baku-Tbilisi-Ceyhan or via Odessa-Brody-Poland. And on May 23-24 in Vienna, Russian President Vladimir Putin’s visit resulted in agreements that integrate Austria into Gazprom’s expanding commercial and transit network, almost certainly dooming the Nabucco project for Caspian gas to central Europe.

These agreements not only reinforce Russia’s existing quasi-monopoly on the transit and use of Central Asian oil and gas, they also seem to commit a lion’s share of future output to Russian destinations or Russian-controlled transit routes.

Cumulatively, the May agreements signify a strategic defeat of the decade-old U.S. policy to open direct access to Central Asia’s oil and gas reserves. By the same token they have nipped in the bud the EU’s belated attempts since 2006 to institute such a policy.

However, the US is doing what it can to find a ray of sunshine through the clouds. Socor writes:

Last week, U.S. Vice President Richard Cheney’s Deputy Assistant for National Security Affairs, Joseph Wood, and U.S. Principal Deputy Assistant Secretary of State Steven Mann rushed to Azerbaijan and Turkmenistan, respectively, for talks with those countries’ presidents and top energy officials on energy transit projects westward (see EDM, June 5). This week, U.S. Assistant Secretary of State Richard Boucher visited Kazakhstan and Deputy Assistant Secretary Matt Bryza visited Azerbaijan, as part of efforts to re-launch those projects.
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In Baku, Bryza made the case for the trans-Caspian and Nabucco pipeline projects in a keynote speech at the Caspian Oil and Gas 2007 event. Bryza demonstrated that Turkmen gas reaching Europe through Russia costs approximately 50% more to transport, compared with the Turkmen gas that could reach Europe via the Caspian Sea-South Caucasus-Turkey route (which Russia blocks). Similarly, gas that Russia wants to sell in Europe through a prolonged Blue Stream pipeline (Blue Stream-2) via the Black Sea-Turkey-Europe route would cost 20% more than gas coming from Azerbaijan through the South Caucasus pipeline (Baku-Tbilisi-Erzurum) pipeline via Turkey to Europe.

Today there is news of trade tendrils running towards Iran.

The Turkmen leader said he had secured Iran's consent to jointly build a railway that would link ex-Soviet Central Asia to the Persian Gulf ports, official Turkmen media said Tuesday.

Turkmen President Gurbanguli Berdymukhamedov, who visited Tehran last week, said he received Iranian President Mahmoud Ahmadinejad's support for the "North-South" railway that will cross from Kazakhstan to Turkmenistan and on to Iran's Persian Gulf coast, the official daily Neutral Turkmenistan said.

I'm not sure if this railroad would be used for carry petroleum or liquified gas, but the US has long been opposed to pipelines running from Central Asia to Iran. For decades the Russians have wanted access to warm water ports along the Persian Gulf. With the strengthening relationship with Turkmenistan and Kazakhstan, Russia could use this railroad to juice its relationship with Iran, and continue to rub American noses in it.

Still, Turkmenistan is not going to burn its bridges with the West. The Central Asia blog says:

In May, President Berdymuhammedov invited ChevronTexaco to make offers. One value of engaging Chevron is that they have very strong relations with Kazakhstan, and own part of the CPC pipeline out of Atyrau to Russia’s port of Novorossiysk. Work with Chevron would therefore introduce Turkmenistan to new customers but also engage Russia and the veteran-of-many-multiparty-oil-deals Kazakhstan. Personally I hope Chevron moves out of this gate. It is a fabulous opportunity.

Also, Turkmenistan will reopen its embassy to Azerbaijan, a country the US is careful to maintain ties with as well.

Other states in the region are also wary of Russia's power. Today the GUAM nations met and continued to discuss alternate routes for gas and oil and that did not go through Russia.

Leaders of four ex-Soviet nations on Tuesday discussed ways to counterbalance Russia's wide influence in the Caspian and Black Sea basins at a summit of their regional grouping.

The summit is the first for the organization called GUAM-Organization for Democracy and Economic Development since its four member countries — Georgia, Ukraine, Azerbaijan and Moldova — agreed last year to deepen ties and cooperation.

The summit's host, Azerbaijan President Ilham Aliev, and other leaders spoke in support of extending the Odessa-Brody crude oil pipeline through Ukraine to bring Caspian Sea oil to a refinery in Plock, Poland, and on to the Baltic Sea port of Gdansk.

Energy makes the world go around. There is a lot of it in Central Asia, and customers are lining up to get it with one hand, while trying to fend off rivals with the other.

(linked at Mudville Gazette's Dawn Patrol)