EurasiaNet Business & Economics - Turkmenistan: Frustration Mounts as Western Energy Companies Wait for Ashgabat to Make Up Its Mind

BUSINESS & ECONOMICS

TURKMENISTAN: FRUSTRATION MOUNTS AS WESTERN ENERGY COMPANIES WAIT FOR ASHGABAT TO MAKE UP ITS MIND
James Delly 11/24/08

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It was the only thing that many of the participants of the 13th Annual Turkmenistan International Oil and Gas Exhiition could think about, yet no Turkmen official cared to mention its name aloud -- Nabucco.

About 90 international energy-related companies sent delegations to Asgabat to attend the Novermber 19-20 conference. A fortunate few -- including Dubai-based Dragon Oil and the Russian heavyweights Gazprom and LukOil -- already have a presence in Turkmenistan. Most US and European Union energy executives were there in the role of anxious suitors -- all of them ready to pounce if the Turkmen government sent a signal, any signal, that it was ready to do business.

Such a sign never came, however, and many Western oil executive departed disappointed, some even disgusted. No matter their mood, though, no Western energy company is ready to give up on the possibility that Turkmenistan will decide to open a new export route that circumvents Russia and China. [For background see the Eurasia Insight archive].

If there was a lesson to be learned in Ashgabat during this year’s conference, it was probably that the early expectations brought about by the regime change in late 2006 have faded. Hopes were high back then that the country’s new ruler, Gurbanguly Berdymukhamedov, would make a decisive break with his predecessor, Saparmurat Niyazov, and move rapidly to integrate Turkmenistan into the global energy scheme. But the latest Ashgabat energy conference seemed to confirm that Berdymukhamedov is just as reluctant to make a development commitment as Niyazov.

"We can observe some change in the country," one participant said, speaking on condition of anonymity. "But it is going to be very very slow [going]."

The buzzword of the conference was "diversification." The EU is intent on diversifying its sources of energy, and would very much like to establish a conduit that would allow it to tap into Turkmenistan’s abundant reserves without having the gas pass through Russia. Several speakers at the conference implored Ashgabat to embrace diversification. One, John Roberts, an expert at Platts, an energy information provider, went so far as to say that Turkmenistan would be making its "biggest mistake" if it continued to shun participation in the Western-backed Nabucco pipeline. [For background see the Eurasia Insight archive].

But frustratingly, even maddeningly, Turkmen officials would not even refer to Nabucco by name. This silence struck some executives as strange, given that Nabucco is expected to feature prominently in a meeting between Turkmen and Azerbaijani officials scheduled to take place in late November.

A common complaint heard among Western executives is that Turkmen officials, other than Berdymukhamedov himself, lack decision-making authority. Thus a lot of discussions went on at the conference without any hope of them going anywhere.

Two high-profile Turkmen government officials, Deputy Prime Minister Tachberdy Tagiyev and Oil & Gas Minister Annaguly Deryaev, held numerous side sessions with Western energy executives. After meeting the two officials, some executives complained quietly that their talks made little, if any, progress in paving the way for a deal.

"Everything is obviously decided by Berdymukhamedov, even though Tagiyev seems to be quite an important figure in the gas sector here," said one executive.

Given the lack of candor among Turkmen officials, perhaps the the most popular participant at the conference was Jim Gillett, a high-level representative of Gaffney Cline & Associates, an energy advisory firm. In October, Gaffney Cline released the preliminary results of a study that showed Turkmenistan’s South Yolotan gas field to be among the top five reserves in the world, with an estimated capacity between 4 trillion and 14 trillion cubic meters. If accurate, bringing the field online could allow Turkmenistan to generate an additional 70 billion cubic meters (bcm) of gas per year. On November 20, the Turkmen government reported that it produced 52 billion bcm during the first three quarters of 2008, of which 35 bcm was exported. Ashgabat earlier said that it would produce 81.5 bcm in 2008.

Energy experts hoped Gillett would provide more information on the capacity of the South Yolotan and Yashlar fields. But Gillett was circumspect, citing a need for additional data. The only statement that he felt confident in making was that Turkmenistan had to be considered "a world-class gas producer."

Editor's Note: James Delly is a pseudonym for a correspondent who specializes in Central Asian affairs.

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