Turkmen Report: June 11, 2002

8 June 2002

Turkmen President Saparmurat Niyazov has announced the establishment of a government working group to handle the construction of a trans-Afghan gas pipeline. He signed a corresponding decree at the government's meeting held on 7 June to sum up the results of his visit to Islamabad on May 29-30, Interfax and ITAR-TASS reported the next day.

"The tripartite agreement on construction of the gas and oil pipeline signed with the leadership of Pakistan and Afghanistan means that these projects are quite viable and there are real political conditions for their realization," Niyazov said at the meeting.

The working group is supposed to search for investors and create a consortium of companies, the president stressed. He also said that the World Bank and the biggest Asian banks have shown interest in the project of transporting Turkmen gas to Pakistan's market.

The 1,500-kilometer pipeline will transport 30 billion cubic meters of gas, Niyazov said, commenting on the Islamabad agreements. Gas will be sold for currency only, Niyazov stressed.

According to the agreement, the governments of Pakistan and Afghanistan are also to create working groups on preparation and realization of the gas pipeline project. The first tripartite meeting at the level of ministers of fuel and energy complexes is to be held in Ashgabat on 10 July after the holding of Loya Jirga and formation of a government in Afghanistan. The first results of work on the trans-Afghan-pipeline project will be summed up at a meeting of the member countries' leaders, which is scheduled to be held in Ashgabat in October of 2002. (Interfax, ITAR-TASS)



8 June 2002

Ukraine and Turkmenistan have agreed a schedule of current debt payments of $46 million for natural gas supplies in 2002, ITAR-TASS reported on 8 June.

Yuriy Boyko, the president of Ukraine's major gas company, Naftohaz Ukrayiny, told journalists on 8 June that the debt is only a small fraction of the overall value of the annual contract with Turkmenistan that stands at $1.5 billion, and Turkmen gas supplies in January through May of this year to a tune of $700 million.

He stressed that Ukraine has paid practically for all the gas it has consumed. "The gas that has not been paid for is in storage," he added. According to Boyko, his company is burdened by the need to pay for gas that has not yet been sold to consumers.

He said the company has signed a protocol on the payment of $65 million in debt to Turkmenistan for gas supplied in 1999. "By 20 June we will have agreed specifications for the equipment to be supplied as a payment of this debt, and this sum will paid this year," he said. (ITAR-TASS)



6 June 2002 The Turkmenobahyzmat (Turkmen Agriculture Machinery) association and American Machinery Company, Inc. have signed a contract for the repair of 420 tractors and John Deere agricultural machinery, as well as delivery of spare parts for these machines, turkmenistan.ru reported on 6 June. According to Turkmenobahyzmat, the total sum of the contract is $6.5 million. The financing will be carried out by the Turkmenpagta (Turkmen cotton) association, which should export production for this sum. Meanwhile, delay of payment is agreed for 1 April 2004. (Turkmenistan.ru)



5 June 2002

A representative from Iran has called on Azerbaijan, Turkey, and Turkmenistan to implement joint projects to produce and transport natural gas to world markets, Interfax reported on 5 June.

Ahmad Rahgozar, vice president of the Iranian National Oil Company, said at the international conference "Caspian Oil and Gas 2002" that total reserves of oil and gas in these states would meet requirements in European countries for hydrocarbons.

Rahgozar noted that Iran supports projects to transport Caspian oil to world markets through its territory or by schemes to exchange oil in the Caspian and Persian Gulf.

He also claimed that the use of Iranian infrastructure and territory to transport oil would reduce transport costs by $2 per barrel. At the same time he drew the attention of European countries to Iranian gas, reserves of which amount to 15 percent of the world's total, and called for the implementation of projects to transport Iranian gas to Western Europe, Pakistan, and India. (Interfax)



4 June 2002

Protection of human rights is a top priority for the country's law-enforcement reforms, President Niyazov said during a meeting with the country's law-enforcement officials on 4 June, Interfax reported the same day. "Law enforcement and military reforms should be primarily aimed at ensuring the protection of human rights," the presidential press service quoted the president as saying.

The president also demanded that the country's law-enforcement agencies "get rid of all corrupted officials and put more focus on crime prevention." "Our main goal is not to detain or arrest criminals, but to bring these people up and help return them to honest life," Niyazov said.

Government commissions for investigating offences committed by officials of the special services and other law-enforcement agencies have been in operation for the last three months in Turkmenistan. Major reshuffles took place in the country, and some 40 senior national security officers were dismissed, demoted, or put on trial for various crimes, including drug smuggling, abuse of office, killings, and blackmail.

Former Defense Minister Kurbandurdy Begendjev was sentenced to 10 years in prison, and investigations are under way into cases opened against former National Security Committee Chairman Mukhammed Nazarov, a number of his deputies and heads of the committee's regional branches, the head of the country's border guard service Tirkish Termyev, as well as some heads of the Interior Ministry and Prosecutor-General's Office. Niyazov said he also plans to overhaul the structure of the Interior Ministry. Some of the ministry's structures, including the traffic police, fire-fighting, and security services, are to be transferred to Defense Ministry control later this summer.

The president earlier said that "not a single man who gives top priority to his personal interests, and not to those of the country, should continue working in these agencies." (Interfax)



4 June 2002

Some 260 young Turkmens will participate in the forthcoming International Youth Games of CIS, Baltic States, and regions of Russia, which will be held in Moscow on 14-24 June, turkmenistan.ru reported on 4 June, citing the games' Organizational Committee.

The games' opening ceremony will be held on 15 June on Moscow's Luzhniki stadium. At the games, sportsmen from Turkmenistan will compete in various age groups in 16 sports, including basketball, volleyball, athletics, tennis, and others. The vice president of the State Committee on Tourism and Sports, Durdi Babaev, will head the Turkmen delegation. (Turkmenistan.ru)



4 June 2002

By Michael Lelyveld

Turkmenistan's latest trouble in collecting payment for gas sales to Ukraine may pose serious problems for both countries. Last week, Turkmenistan President Saparmurat Niyazov called President Leonid Kuchma seeking $46 million for Ukraine's current gas bills, Turkmen television reported. The debt is owed by the national oil-and-gas company, Naftohaz Ukrayiny.

Niyazov also complained about the slow performance of Ukrainian contractors who have been trading services on projects in Turkmenistan under a barter deal that requires only half of Kyiv's payments in cash. Kuchma promised "he would do his best" to deal with the problems, Interfax reported, quoting Niyazov's press service.

But it is not clear that Kuchma has fully acknowledged Kyiv's obligations, or that a solution is in the works. During a visit to Ashgabat at the end of April, Kuchma told a joint press conference that Ukraine still owed Turkmenistan for gas delivered in the 1990s. But he said: "Concerning the current state of payments, I don't think we...have any problem there. We are making payments for every bit of gas supplies."

Judging by the amount of current debt claimed by Niyazov, Ukraine may have failed to pay for more than 2 billion cubic meters of gas delivered this year. Turkmenistan is charging Ukraine $42 per 1,000 cubic meters at the Turkmen border. But under the half-cash deal, Niyazov seems to be counting Ukraine's bills at the rate of $21 per 1,000 cubic meters, while treating its slow services as an additional problem.

Kuchma's accounting for Ukraine's old debts to Turkmenistan is also murky. Speaking at the joint press conference, Kuchma said, "They stand at some $65 million for the period prior to 1990 and 1999." But past reports and a more recent one by Ukraine's UNIAN news agency put the debt for gas supplied in 1993 and 1994 at $281.7 million.

Various figures have also been published for gas debt that Ukraine incurred in the first quarter of 1999, ranging from $107 million to $200 million. It is not clear how much of that amount Turkmenistan considers paid. At one time, Turkmenistan also sought to impose $82 million in penalties for the 1993-94 debts, according to the Trend news agency. Taken all together, Ukraine could owe Turkmenistan more than $600 million for gas.

But despite bad experience, Niyazov has seemed reluctant to cite the cumulative figures, preferring to start over again with Ukraine and publicize only the smaller amount of the debt for this year. In October 2000, Niyazov was persuaded to restart gas deliveries to Kyiv, despite two earlier cutoffs for arrears, on the condition that it would make monthly payments for supplies in advance. That arrangement appears to have slipped again into arrears.

There also appear to be big discrepancies between the amount of gas that Turkmenistan says it shipped to Ukraine and how much Kyiv says it received. On 27 May, Turkmen officials claimed to have sent nearly 13 billion cubic meters of gas to Ukraine so far this year.

But on 22 May, the Ukrainian Fuel and Energy Ministry told Russia's RBC News that Turkmenistan exported only 6.9 billion cubic meters to Ukraine in the first four months of the year.

The public disclosure of payment problems will do little for either country. Turkmenistan's finances have long been suspect because of its reliance on Ukraine as its major market. Ukraine's creditworthiness can hardly be helped by falling behind on its bills.

Niyazov's choice to keep doing business with Ukraine reflects the fact that he has few other choices. After two years of talks, Turkmenistan seems no closer to signing a long-term gas supply deal with Russia, although Gazprom chief executive Aleksei Miller tried again in April, Platts news service reported.

Miller visited Ashgabat with President Vladimir Putin for a Caspian Sea summit, but he was rebuffed with familiar complaints. Niyazov accused Gazprom of selling Turkmen gas in Europe at more than twice the price of fuel at the Kazakh border, ignoring the cost of transport.

Putin has been trying to get Turkmenistan to join in a Central Asian gas alliance. But the Russian business newspaper "Vedomosti" quoted Niyazov as saying, "As long as Russia does not allow Turkmenistan into the European market, there will be no point for Ashgabat to participate in any alliance."

Instead of allowing Turkmenistan to make deals in Europe using Russian pipelines, Moscow has agreed to carry Turkmen gas only as far as Ukraine. Russia has profited from the trade while reducing its own risk of supplying Ukraine.

Niyazov has only been able to seek repayment and hope for the best. Last year, he signed an agreement to supply Kyiv with 250 billion cubic meters of gas between now and 2006. But last month, Interfax quoted sources in Ashgabat as saying Ukraine may lower its purchases from Turkmenistan this year.

Niyazov recently invited Ukraine to take part in more projects, including the construction of a gas pipeline through Afghanistan, which still lacks a funding source. It seems that he can only stay engaged with Kyiv and hope that it will make good on its debts. (RFE/RL)