MONTREAL - The presidents of Azerbaijan, Kazakhstan, Russia, and Turkmenistan
ended their meeting in Kazakhstan's resort city of Kenderly last weekend with
its purpose and consequences as clear as distant figures in an early autumn
mist.
Two elements did emerge more clearly than others - Turkmenistan's determination
to diversify its energy export routes and to make future price talks with
Russia tough going, and Iran's displeasure at not being invited to the party.
There was no published agenda for the quadrilateral meeting in Kenderly,
against which the Iranian foreign minister issued a public protest at the
exclusion of his country, the fifth Caspian Sea littoral state. The foreign
ministry of Kazakhstan, the host
country, had stated earlier that pan-Caspian issues such as division of rights
to subsea resources would not be discussed; but with no official communique or
even anonymous press leaks it is difficult to know for certain.
The site of the meeting, near the Caspian Sea port of Aqtau, may have carried
its own message - Aqtau, by coincidence, or not, is becoming an important link
in the west-to-east transmission of energy supplies from Asia to Europe.
The Kazakhstan-Caspian Transportation System is projected to run from Eskene,
onshore near Tengiz, to the port of Kuryk, near Aqtau. The oil it carries will
then enter the Baku-Tbilisi-Ceyhan pipeline, turning it into the
Aqtau-Baku-Ceyhan pipeline, terminating near the Turkish Mediterranean coast.
(See Caspian
pipelines ease Russia's grip, Asia Times Online, July 8, 2008). The
project is designed to reduce Kazakhstan's dependence on the Moscow-controlled
Tengiz to Black Sea pipeline of the Caspian Pipeline Consortium.
Anything could have been discussed bilaterally or trilaterally outside the
formal meetings as well. Technically speaking, the attendees could even discuss
cooperation on energy pipeline construction without raising the issue of the
Caspian Sea's legal status. The Iranian fear is that even if such things as
division of the Caspian Sea were not formally discussed, the meeting
nevertheless could have offered Russia an opportunity to seek to solidify a
political bloc with the other three countries, which are former Soviet
republics.
The presidents of Russia and Kazakhstan arrived together at the summit
following a bilateral meeting in Orenberg (the transborder Russian processing
plant that takes gas from Kazakhstan's massive Karachaganak deposit in the
north of the country), but it seems unlikely that the Iranian fear was
realized.
From this obscurity of purpose, Turkmenistan's President Gurbanguly
Berdymukhamedov almost stole the show as his country's media published under
his name a unilateral statement from Ashgabad as the meeting in Kenderly got
under way.
The statement, to commemorate the national celebration of Oil, Gas, Electrical
Workers and Geologists Day, notably made no mention of the Caspian Coastal
Pipeline, which passes from Turkmenistan to Russia through Kazakhstan and which
the three countries agreed two years ago to reconstruct but on which no work
has been accomplished. This Soviet-era gas pipeline, in severe disrepair, runs
along the Caspian Sea coast in Turkmenistan and southwest Kazakhstan before
turning northward into Kazakhstan and finally northeast to join the main trunk
of the Central Asia-Center pipeline complex to Russia.
However, Berdymukhamedov's statement did take note of the Turkmenistan-China
gas pipeline now under construction through Uzbekistan and Kazakhstan (see
Gas pipeline gigantism, Asia Times Online, July 17, 2008), as well as
the Turkmenistan-Afghanistan-Pakistan-India project, which is still on the
drawing boards but on which some progress (on the drawing boards) has been made
over the past few years.
The message to Moscow could not be clearer: Turkmenistan is seeking to
diversify its export routes, and any future bargaining over prices for
quantities to be dedicated to Russia will be tough going.
The Turkmenistan president's statement even invoked the prospect of his
country's gas feeding the Nabucco pipeline to Europe (the pipeline will transit
Turkey, thereby avoiding Russian territory) despite the fact that the Nabucco
Pipeline Company announced almost simultaneously, and without explanation, that
it was putting the start of construction off from 2009 to 2011, the start of
operations from 2012 to 2014, and the finished product from 2014 to 2016.
There are three possible reasons for this delay that are not mutually
exclusive. First, the Nabucco pipeline is intended to carry gas from several
sources, including Azerbaijan and in particular that country's offshore Shah
Deniz field. In view of Azerbaijan's discussions with Russia about cooperation
in the development of gas in Shah Deniz Two and Russia's stated willingness to
pay a good price for the fuel, those involved with Nabucco may be hedging their
bets and thinking of relying more in the long run on gas from the Shah Deniz
Three stage.
Second, the delay likely reflects Turkey's on-again, off-again policies towards
legal and tariff issues with the European Union that had been resolved
bilaterally in May in a remarkable breakthrough but later, after further
Russian-Turkish negotiations over the South Stream pipeline, Russia's answer to
Nabucco, reappeared to block further progress on the European pipeline.
Third, and perhaps most serious, the delay in Nabucco undoubtedly reflects the
re-eruption of the territorial conflict between Turkmenistan and Azerbaijan
over delimitation of Caspian Sea subsoil sectors that helped to block the
Trans-Caspian Gas Pipeline (TCGP) from being constructed a decade ago. A new
TCGP project is part of Nabucco's current plans, and the full Nabucco project
cannot be realized without significant gas from Turkmenistan.
One of the variants of the TCGP that has been recently mooted, in the attempt
to overcome this difference between Turkmenistan and Azerbaijan, is the
construction of a gas pipeline from Kazakhstan under the Caspian Sea to
Azerbaijan for product either from Karachaganak offshore or, later, the
offshore Kashagan project, where a large amount of associated gas will need to
be somehow captured as the underlying crude oil is developed.
A pipeline from Turkmenistan could then join that Kazakhstan-Azerbaijan
pipeline in the Kazakh offshore sector, enabling Turkmenistan's gas to enter
Nabucco without the need for it to cross directly into the Azerbaijani sector.
This last option, however, is encountering difficulties. Indeed, following the
Kazakhstani energy minister's visit to Beijing two weeks ago, Kazakhstan and
Azerbaijan decided to explore the possibility of Azerbaijani gas flowing
eastward under the Caspian Sea to Kazakhstan and proceeding from there to
China. The fuel would be conducted by a second Kazakhstan-China pipeline laid
in parallel with the corresponding segment of the Turkmenistan-China pipeline
mentioned above, that would itself pass through Kazakhstan.
This amounts to reversing the flow of the projected pipeline that would have
been designed to allow Turkmenistan's gas to reach Europe without requiring a
resolution of the offshore delimitation conflict with Baku.
However, this would not preclude gas from Azerbaijan reaching Europe. The
president of the State Oil Company of the Azerbaijan Republic, Rovnag
Abdullaev, announced, also just in time for the summit in Kenderly, that the
new inventory of Azerbaijan's offshore gas reserves amounts to no less than 5
trillion cubic meters.
Abdullaev emphasized, as Azerbaijani officials have done all along, that
decisions on export destinations will be taken on the basis of the definition
of markets, volumes, and conditions of transportation. Such a policy
demonstrates the common sense of multiple export pipelines, a policy pioneered
by Azerbaijan, followed by Kazakhstan, and now adopted by Turkmenistan.
Dr Robert M Cutler (http://www.robertcutler.org), educated at the
Massachusetts Institute of Technology and the University of Michigan, has
researched and taught at universities in the United States, Canada, France,
Switzerland, and Russia. Now senior research fellow in the Institute of
European, Russian and Eurasian Studies, Carleton University, Canada, he also
consults privately in a variety of fields.
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