Royal Dutch Shell Plc  .com Rotating Header Image

THE WALL STREET JOURNAL: Turkmenistan’s Energy Rush

Wall Street Journal image

THE WALL STREET JOURNAL: Turkmenistan’s Energy Rush

Vast Natural-Gas Stores
Spur Scramble for Access
By U.S., Russia, Europe

August 31, 2007; Page A5

With a new leader flinging open the doors to the outside world, the Central Asian nation of Turkmenistan is emerging as a crucible of regional rivalries as Russia, China, the U.S. and Europe compete for access to its vast energy reserves.

Since the death in December of Saparmurat Niyazov, an eccentric and reclusive dictator who charted a fiercely isolationist course for Turkmenistan, the country has begun to open up, unleashing a stampede of Western and Russian oil-and-gas men.

Executives from Chevron Corp., Royal Dutch Shell PLC, Total SA, BP PLC and its Russian venture TNK-BP have flocked to the capital of Ashgabad to meet Kurbanguly Berdymukhamedov, the new president, who has reached out to the West in ways his predecessor never did.

They have been joined by a steady stream of U.S. officials keen to revive a plan to build a pipeline across the Caspian Sea that would ship Turkmen gas westward, bypassing Russia and loosening Moscow’s grip on Central Asia’s energy riches.
“There’s been a sea change,” says Atul Gupta, chief executive of Burren Energy PLC, a U.K. independent that has been producing oil in Turkmenistan since 1997. “We’ve got a bit of a Great Game being played out in Turkmenistan now,” he added, referring to the 19th-century struggle for regional influence between the U.K. and Russia.

The rush comes amid a global hunt for fresh energy supplies. Most of the world’s proven energy reserves are in the Middle East — mostly off limits to foreign investors. Europe is eager to diversify its supply of natural gas to rely less on Russia, which has shown its willingness to withhold supply to advance its political agenda.

So far, the race to open up Turkmenistan’s hydrocarbon reserves — the country is thought to hold one of the world’s most abundant stores of natural gas — is being won by Russia and China.

In May, President Vladimir Putin became the first world leader to visit Mr. Berdymukhamedov. In a coup for Moscow, the two parties agreed to build a new gas pipeline around the Caspian Sea and northward to Russia, and to upgrade Soviet-era infrastructure in Central Asia. That would increase deliveries of Turkmen gas to Russia to 90 billion cubic meters a year, from 50 billion cubic meters a year now, Russian officials said.

The deal was a blow to the European Union, which has long sought to free Turkmenistan from Moscow’s grasp. There were fears in Brussels that the Russian deal could undermine the viability of the EU’s grandiose Nabucco pipeline project to bring gas from Central Asia and Iran to Turkey and Eastern Europe.

Yet Russia, too, has suffered setbacks. In July, Mr. Berdymukhamedov went to Beijing and endorsed a plan to build a pipeline from Turkmenistan delivering 30 billion cubic meters of gas a year to China. He also signed a landmark deal allowing China National Petroleum Corp. to drill for gas in one of Turkmenistan’s most promising fields, Bagtyyarlyk. Beijing hopes gas from there will fill the new pipeline.

The deal was bad news for Russia’s OAO Gazprom, which relies heavily on imports of Turkmen gas to offset declines at its own big fields in western Siberia and ensure it can meet its long-term export commitments to Europe.
Despite Russian and Chinese advances, Europe and the U.S. haven’t given up hope of getting a slice of Turkmen gas. Encouraged by President Berdymukhamedov, who has said his country has a long-term interest in diversifying its export routes, U.S. officials have been visiting Ashgabad to talk up the Trans-Caspian gas-pipeline idea. This month, the U.S. gave Azerbaijan a $1.7 million grant for a feasibility study to build oil and gas pipelines across the Caspian.

Most observers think the Western plan stands little chance against Gazprom and the Chinese. “The Trans-Caspian pipeline needs three things: gas, markets and finance,” says Prof. Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies. “At the moment, it doesn’t have any of them.”

Some analysts wonder whether Mr. Berdymukhamedov has promised too much to too many countries. Christof van Agt, an expert on Central Asia at the International Energy Agency in Paris, says Turkmenistan would need $5 billion in investment every year for the next 25 years to boost output to 130 billion cubic meters by 2016 — the amount it needs to meet all its export commitments. It is forecast to produce 65 billion cubic meters this year.

“If it’s going to be able to supply China, Russia, Europe, India and Pakistan as it says it wants to, it needs to start moving fast to get this investment in place,” he says.

Turkmenistan’s new leader, who was Niyazov’s dentist and went on to serve for several years as his health minister, is already drawing parallels with his predecessor, who had a reputation for selling more gas than he could produce.

Still, the foreign energy companies keep coming. In July, Mr. Berdymukhamedov invited Chevron executives to discuss developing a big oil field, Serdar, in the Turkmen section of the Caspian Sea. Geologists have long known about the deposit, but Big Oil shied away from it because it was also claimed by Azerbaijan. With Niyazov’s death, observers say, there is hope the two countries will work out how to share Serdar, known as Kyapaz in Azerbaijan.

Hanging over the future of such projects is uncertainty about the precise size of the oil and gas reserves. Mr. Niyazov decreed such information a state secret.

Write to Guy Chazan at [email protected] and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “THE WALL STREET JOURNAL: Turkmenistan’s Energy Rush”

Leave a Comment

%d bloggers like this: