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Turkmenistan: Niyazov Rejects Long-Term Gas Deal With Russia

  • Michael Lelyveld

Turkmen President Saparmurat Niyazov has rejected a 30-year deal to supply gas to Russia, easing U.S. concerns that the country would not have enough gas for a trans-Caspian pipeline project. But our correspondent Michael Lelyveld reports that the leader's erratic behavior this month should be a caution to companies that may try to rely on his decisions.

Boston, 26 September 2000 (RFE/RL) -- Turkmenistan's unpredictable President Saparmurat Niyazov has ruled out a long-term gas deal with Russia, which he actively promoted only four months ago.

Speaking on Friday, Niyazov said he would not conclude a 30-year contract to supply gas to Russia, although he announced just such a preliminary pact when Russian President Vladimir Putin visited Ashgabat in May. Since then, Turkmenistan has reached a deal to boost fuel deliveries to Moscow this year, but it has yet to sign an agreement for 2001.

Niyazov cited frequent changes in market conditions, saying, "We will sell gas to Russia but long-term agreements can lead to we will sell gas for a maximum term of two, three years."

The decision, if Niyazov sticks to it, would be a major change for Turkmenistan, which seemed headed toward a monopoly relationship with Russia for the last several months. The talk of a long-term contract for up to 50 billion cubic meters of gas per year raised concerns among developers of the trans-Caspian pipeline that Turkmenistan would be left without enough resources for the U.S.-backed export route.

Now, Niyazov's refusal to make a commitment to Russia may raise hopes for the trans-Caspian line to Turkey again. The Turkmen leader has delayed approval for the project for so long that the consortium of U.S. firms that was ready to build the pipeline has instead decided to close its offices in Ashgabat.

But Niyazov's signals on the pipeline were mixed at best. He insisted that it should not be written off despite his indefinite delay, saying, "We have not refused any project. Whatever project is beneficial for us we will continue. All the projects are still alive." He also renewed his demands for concessions from the developers, saying, "Let them provide political guarantees, let them provide ecological guarantees and let them make a pre-payment," according to Agence France-Presse.

Niyazov's repetition of the demands, including one for an advance payment of some $500 million, is likely to disappoint the remaining backer for the project, the Anglo-Dutch oil firm Royal Dutch/Shell. In August, an optimistic Shell executive told The Wall Street Journal that it was "a question of days or at most weeks" before Niyazov named the company to build the pipeline. But as the weeks have dragged on, Shell officials have switched to warning that the project is running out of time.

In a further blow, Niyazov reportedly said that Iran offered the shortest and most secure route for piping gas to Turkey, casting doubt on the entire plan for the trans-Caspian line. In August, Turkmen officials quoted Niyazov as saying that the country should pipe its gas directly to Turkey rather than through Russia or Iran.

Such wildly varying statements help to explain the frustrations of Western oil companies and officials in dealing with Niyazov. It is hard to base business decisions on whims that seem to change from week to week.

In this case, Niyazov's new and tougher positions appear to be related to his partially-successful efforts to win higher prices for Turkmen gas. He recently convinced Russia to pay $38 per thousand cubic meters, considerably more than Moscow offered earlier this year. Ashgabat has also taken a harder bargaining stance with former customers Ukraine and Georgia by insisting on better terms to settle their gas debts before providing new supplies.

But Niyazov has also engaged in behavior than can only be viewed as erratic, making it impossible to separate strategy from autocratic impulse. This month, the Turkmen leader announced plans to create a "giant artificial sea" in the Karakum desert, covering over 3,400 square kilometers at a cost of 4 billion. Officials have reacted angrily to skepticism over the grandiose project.

In a country where citizens struggle to meet basic needs, Niyazov also disclosed plans this month for a new presidential residence in Turkey. His dealings with subordinates have appeared even more bizarre.

After establishing a practice of appointing officials to posts for probationary periods, Niyazov this month added the provision that the officials will not be given new jobs if they fail their first test.

In a region where many nations have suffered the devastating effects of drought, Niyazov also became furious this month with the governor of Turkmenistan's Dashgovuz Region for failing to meet crop targets and offering the water shortage as an excuse. Niyazov publicly denounced the hapless official, saying, "Look, there are other governors here in the hall. And none of them had enough water this year. However, they all managed to cope with their tasks."

Niyazov also criticized the governor for failing to report burglaries of officials' homes in his district, saying that the robbers "do this knowing in advance which of the top officials in the region are committing dishonest acts."

Such statements leave little hope for foreign companies to finding a dependable business partner in Turkmenistan.