Turkmenistan gas sets Ciceronian riddle
By Robert M Cutler
MONTREAL - Questions have been raised this month about whether the gas
resources of Turkmenistan are in fact as spectacularly voluminous as verified
last year by the British firm, Gaffney Cline & Associates.
Gaffney Cline certified that the new South Yoloton field held between 4
trillion and 14 trillion cubic meters (Tcm) of gas, with the most probable
scenario at 6 Tcm, and that Yashlar held
between 0.3 Tcm and 1.5 Tcm, with the most probably scenario at 0.7 Tcm.
These volumes would confirm the country as a leading producer on the world
scene and do not even take into account other fields that remain unexplored.
They would justify claims reported to have been privately made to Western
leaders by the country's former president, Saparmurad Niyazov, shortly before
his death almost three years ago.
However, two-and-a-half weeks ago, and within a day of one another, there
appeared an article by Arkadii Dubnov in the Russian newspaper Vremya Novostei
and a separate report on the website of the German-based Eurasian Transition
Group questioning such claims. This was on the basis of confidential
information supposedly gleaned secretly from officials in Moscow in the first
instance and in Ashgabad in the second.
To help evaluate these allegations, one could recall the adage oft-employed by
Marcus Tullius Cicero: "Cui bono?" Literally translated, this means, "To whom
[accrues] the benefit?" A looser and more colloquial modern translation would
be, "Follow the money". So let us follow the money. Who benefits?
As a top Gaffney Cline representative explained in an e-mail published by a
EurasiaNet correspondent, his firm's auditing process followed international
standards (which is why Ashgabad chose a Western firm in the first place) and
involved assessing "a very considerable volume of data ... [from] a wide range
of types and from a range of sources: in practical terms, impossible to falsify
[systematically in such a way as to] appear to be coherent and [so] mislead an
expert team." With its international reputation on the line, Gaffney Cline
would have no motive at all to be complicit in such a putative falsification.
Yet there is no doubt that the publication of this information, whether it is
true or false, is to Turkmenistan's disadvantage. In fact, it complements what
Russian media and officials have now insisted for many months, to wit, that
Moscow has already contracted all future gas from Turkmenistan. There is a
contract in principle signed under Niyazov to provide Russia with 50 billion
cubic meters per year (bcm/y), but that is subject to continual negotiations
and re-negotiations over price.
Because of the pricing disagreement, there have been no gas exports from
Turkmenistan to Russia since an April pipeline explosion for which the former
blames the latter. Following repairs, political agreements between the two
sides to resume the flow have been stymied, precisely because Russia wants a
price lower than it had been paying, and moreover a formula for its calculation
that would permit it to vary over time. Turkmenistan still wants a fixed price
at top dollar.
The ill-will that this series of events has engendered in Ashgabad has led
President Gurbanguly Berdimuhamedow to seek Western contractors for repair of a
separate "East-West" pipeline in the south of the country ending on the Caspian
Sea, raising the possibility that the gas it carries could flow further west,
across and under the sea, eventually to Europe, rather than north to Russia.
Here it is pertinent to remark on the quality of news reports on energy matters
in the Russian media. By and large, these are factually correct. However, on
more than a few occasions over the past several years, official English
translations of Russian news stories have carried implications differing from
the original Russian, ostensibly due to poor translation or differential
editing.
A survey of such instances reveals that the nuances thus introduced tend almost
uniformly to invite interpretations that are advantageous to Russian state
interests, whether through omission by suggesting greater Russian influence on
events, or through commission by offering as facts things that are not so.
This is not to say that there is a centralized propaganda strategy emanating
from the Kremlin. That is a question of fact, and there is no direct evidence
to confirm such a suggestion. However, the evaluation of any new information
offered by such sources must take into account existing evidence for an
established pattern of consistent bias, whatever may be the reasons for such a
pattern, even if it is merely "group think" by Russian journalists.
For example, ever since the signature of the contract for Azerbaijan to send
0.5 bcm of gas from Shah-Deniz Phase 2 to Russia in 2010, Russian media and
officials have stated at every opportunity that they will have what amounts to
"first refusal" on subsequent Shah-Deniz Phase 2 production. However, no legal
documents binding the Azeri side to such a bargain exist.
Nevertheless, such a claim on the Russian side is in the same line as reports
about allegedly falsified numbers concerning Turkmenistan's gas reserves. And
continuing insistence from Moscow that Russia will effectively remain the sole
(or main) buyer of Central Asian gas, whether from Azerbaijan or from
Turkmenistan, is in the same line as suggestions that Europe should abandon any
hope to import, in any significant quantity, Caspian Sea basin natural gas
reserves.
In the same vein, Yashigeldy Kakaev, who directs Turkmenistan's State Agency on
Hydrocarbon Resource Management and reports directly to Berdimuhamedow, was
vexed this month when Russian media quoted him correctly but only in part as
saying that Turkmenistan looked forward to beginning its exports to China in
the near future, while insisting that that Western partners build a pipeline to
Turkmenistan's border (where the country sells its gas by state policy).
An editorial statement about the unlikelihood of the latter would give the
appearance that Kakaev downplayed ideas about pipelines such as the
Europe-backed Nabucco and advocated instead China's access for Turkmenistan's
market.
Yet the attribution of such a China-oriented view to Kakaev would be
surprising, since the public record shows numerous statements by him strongly
advocating a European direction for Turkmenistan's exports. Indeed, to suggest
that he favors a China-only (besides Russia) export strategy would be the very
opposite of what he really said at the time, as extensively reported by other
news agencies, two weeks ago at a high-level conference in Bucharest.
It is the case that a pipeline under construction from Turkmenistan through
Uzbekistan and Kazakhstan to western China, scheduled for completion early next
year, will have a capacity of 40 bcm/y. But in such a context, questions about
Turkmenistan's reserves pointedly invite the observer to conclude that there
will be no gas for westward export to Europe after fulfillment of contractual
obligations to Russia and China.
There seems to be a risk that some US companies may take the bait. These
companies have suggested to the Turkmenistan government that, if they should
receive production-sharing agreements, then they would like to participate in
exports to China. This idea makes no commercial sense to officials in Ashgabad,
however, for they do not need such help; the Chinese are capable of providing
it and are already doing so.
On the other hand, energy officials in Turkmenistan are very aware of bilateral
Russian-Chinese energy cooperation now being launched at the highest level as a
knock-on from Russian Prime Minister Vladimir Putin's recent visit to Beijing.
Indeed, they recognize that Turkmenistan's own interest is not to be locked
between the two large countries, which could easily collude against it. They
thus know that they need export markets, not only other than Russia, but also
other than China.
These Turkmenistani officials are, then, precisely those who would have reason
to fear that Western players believe the new allegations about falsification of
reserves, which Russian players have a motive to make to appear credible. Yet
they will not risk angering Russia with a small agreement for exports to
Europe.
It follows that piecemeal offers from the West are unlikely to provide
sufficient incentive for so radical a re-orientation of Turkmenistan's export
policy in practice.
Ashgabad is waiting (and hoping) for a consolidated and practical offer from
European and/or American companies that, by its very magnitude, will motivate a
seismic shift westward in the geo-economics of the Eurasian hydrocarbon energy
complex, and natural gas in particular, finding Turkmenistan in the first rank
of those happy to participate in such an initiative, which would create its own
momentum.
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.
(Copyright 2009 Asia Times Online (Holdings) Ltd. All rights reserved. Please
contact us about
sales, syndication and
republishing.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
