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Turkmen Report: October 29, 2002


29 October 2002
NATIONAL NEWS
Ashgabat Pipeline Meeting Postponed Indefinitely


26 October 2002

A meeting of the presidents of Turkmenistan, Afghanistan, and Pakistan set for the Turkmen capital Ashgabat has been postponed indefinitely, AP reported on 26 October.

The leaders were expected meet the weekend of 26-27 October to sign a framework agreement on building a natural-gas pipeline linking the three countries.

The office of Turkmen President Saparmurat Niyazov said on 26 October that problems with the Pakistani delegation and questions over financing the pipeline required the meeting to be postponed. It did not say when the meeting would take place.

The proposed 1,460-kilometer pipeline would carry gas from Turkmenistan's Dauletabad fields, across Afghanistan, to Pakistan's Arabian Sea coast. Estimates say the line could transport as much as 30 billion cubic meters of gas a year and would cost $2 billion to complete. (AP)

Ukraine, Turkmenistan Sign Gas-Export Contract


26 October 2002

According to contract signed on 26 October by Naftohaz Ukrayiny and Turkmenistan's Turkmenneftegas, 36 billion cubic meters of gas will be exported to Ukraine next year, turkmenistan.ru reported the next day. The gas price for 1,000 cubic meters, increased from $42 to $44. As previously, 50 percent of the gas exports will be paid for in hard currency and the other half will be paid for by construction services and equipment deliveries. (Turkmenistan.ru)

Niyazov Condemns Hostage Seizure In Moscow


25 October 2002

Turkmen President Niyazov has resolutely condemned the taking of hundreds of hostages in Moscow, Interfax reported on 25 October, citing the presidential staff.

A government spokesman quoted Niyazov as saying at a conference with law-enforcement chiefs held the day before: "We strongly condemn terrorism in all its manifestations. Political problems cannot be solved by taking innocent people hostage."

In the course of the conference, Niyazov instructed the domestic law-enforcement agencies to be vigilant and maintain law and order, especially on the upcoming holiday on 27 October when Turkmenistan celebrated its independence.

"The people must feel themselves a protected state, feel safe, celebrate Independence Day worthily and joyfully, live and work in peace. One should not turn a blind eye even to the slightest breach of the law since minor offences trigger major ones. Although peace and accord reigns in Turkmenistan, this gives no pretext for lenience," said Niyazov. The head of state gave to the heads of appropriate law-enforcement agencies specific assignments to organize work. (Interfax)

Turkmen Muslims Denounce Terrorists


25 October 2002

Turkmenistan's Muslims condemned the actions of the Chechen hostage takers in Moscow.

"No aim can justify terrorism, there is no justification for it in any religion of humanity, especially in Islam, which condemns extremism and terrorism in any of their manifestations," Turkmenistan's Mufti Nasrullah ibn Ibadullah said in an interview with ITAR-TASS on 25 October.

On behalf of all the Muslims of Turkmenistan, the mufti expressed sympathy for the hostages and their relatives. "We hope the negotiating process will finally lead the terrorists to giving up bloodshed and to a peaceful settlement of the confrontation," the mufti said. (ITAR-TASS)

Russian State Duma Ratifies New Russian-Turkmen Friendship Treaty


23 October 2002

Russia's State Duma, the lower house of parliament, has ratified the new treaty of friendship and cooperation between Russia and Turkmenistan signed on 23 April by Presidents Vladimir Putin and Saparmurat Niyazov, ITAR-TASS reported on 23 October.

The treaty underlines the two countries' commitment to the goals and principles of the United Nations Organization Charter, the Helsinki Act, the European Security Charter, and other documents of the Organization for Security and Cooperation in Europe.

With the adoption of the treaty by the Duma, Russia and Turkmenistan get a new legislative format for developing political, economic and humanitarian cooperation, Duma sources said.

They stressed that friendship, good-neighborliness, and cooperation served the fundamental interests of both Russia and Turkmenistan. (ITAR-TASS)

UN Secretary-General Visits Turkmenistan


22 October 2002

During his two-day official visit to Turkmenistan, which started on 22 October, United Nations Secretary-General Kofi Annan said the UN would organize a series of conferences in Central Asia to address the region's main problems -- terrorism and the smuggling of illegal drugs, AFP and AP reported.

Annan said it is also necessary to do everything possible to prevent conditions in Afghanistan from deteriorating to the situation that existed when the Taliban ruled most of the country. Annan thanked President Niyazov for the help his country rendered to Afghanistan since last year.

Niyazov said he hoped the UN would help with a proposed Turkmenistan-Pakistan natural-gas pipeline. The project, with an estimated cost of more than $2 billion, calls for the pipeline to be built across the western part of Afghanistan.

After his talks with Niyazov, Annan expressed support for the pipeline project, saying it could boost economic activity in the region. (AFP, AP)

Turkmenistan Signs Agreement With Danish Oil Company


22 October 2002 President Niyazov and a top Maersk Oil Company official Kel Felgo signed a production-sharing agreement in Ashgabat on 22 October for blocks No. 11 and No. 12 of Turkmenistan's sector of the Caspian Sea, which contain estimated reserves of 300 million tons of hydrocarbons, Interfax reported the same day, citing sources in the presidential administration. Precise details of the agreement were not disclosed. (Interfax)

FEATURES AND ANALYSIS
Kyiv Piling Up Debts For Fuel, Despite New Gas Deal With Turkmenistan


25 October 2002

By Michael Lelyveld

Turkmenistan has succeeded in raising its gas prices in a new export deal with Ukraine, but there are doubts about whether the trade will produce higher profits or debt.

The two countries are scheduled to sign an agreement on 26 October in Ashgabat for gas supplies to Ukraine next year, providing Turkmenistan with an increase in both volume and price.

On the surface, the deal coinciding with the 11th anniversary of Turkmenistan's independence would mark a step forward for the country's economy, which is highly dependent on gas and its main export market in Ukraine.

Kyiv has agreed to buy 36 billion cubic meters (bcm) of Turkmen gas next year as part of its five-year deal to import 250 bcm by the end of 2006. Next year's volume would grow by 2 bcm, while the price would rise from $42 to $44 per thousand cubic meters.

That should mean extra revenue for Turkmenistan's cash-strapped economy in a total trade worth nearly $1.6 billion. But it is likely that the deal will bring the country much less than it expects.

Under its long-term agreement, Ukraine is required to pay for only half of the gas in cash, with the remainder to be covered by goods and services. Turkmenistan has made clear in the past week that Ukraine has not even paid all of the cash.

In a telephone call on 21 October, Turkmenistan President Niyazov reminded President Leonid Kuchma that the Ukrainian state oil and gas company has already run up a debt of $150 million for fuel supplies this year. Niyazov asked Kuchma to personally control the payments in the future, the ITAR-TASS news agency reported. Kuchma promised unspecified "additional measures" to speed up Ukraine's repayments and the projects it has undertaken in Turkmenistan.

But the buildup of debt appears to be a violation of Kuchma's previous pledge in October 2000 that Ukraine would pay for gas deliveries in advance on a monthly basis. Niyazov had required prepayment as a condition of resuming supplies after a cutoff due to earlier debts.

It is hard to reconstruct a total of all the debts that Ukraine owes for Turkmen gas because different amounts are owed for different periods. In April, Kuchma acknowledged a debt of $282 million for gas imports in 1993 and 1994. In June, the Naftohaz Ukrayiny company signed an agreement to repay $65 million owed for gas used in 1999. The company also agreed on a schedule to repay $46 million for gas provided this year, but the sudden rise to the current figure of $150 million suggests that payments have fallen into arrears.

The figures indicate that Ukraine now owes a total of some $500 million, greatly reducing the benefit of the $2 increase that Turkmenistan won in its rates for next year. But the country may have little choice for its exports because it has yet to agree on terms for gas sales to Russia, despite a 15-year accord that was initialed in September and would start in 2005.

Until then, Russia has agreed to import the residual amounts of gas that can fit in the old Soviet-era pipelines from Turkmenistan after commitments to Ukraine and the gas trader Itera are fulfilled. That amount may not be much, since the lines have deteriorated. And Russia has balked at the price that Turkmenistan wants it to pay.

Aside from small volumes for Iran, Ashgabat has no other current options. It has hopes for a pipeline through Afghanistan to Pakistan, but the date remains uncertain. A plan to export gas to Europe through Ukraine appears to be bogged down in disputes between Moscow and Kyiv, while the capacity of pipelines seems likely to keep any trade small.

Even worse, Turkmenistan's figures on its exports to Ukraine this year seem especially suspect. Separate reports by the Interfax news agency this month paint a conflicting picture of how much gas trade has actually taken place.

According to Interfax in Ashgabat on 16 October, Turkmen gas exports in the first nine months of the year amounted to almost 30 bcm, of which 90 percent went to Ukraine. That would make sales to Ukraine equal to roughly 27 bcm. But according to an Interfax report from Kyiv one day later, Ukraine imported 14.4 bcm from Turkmenistan, or a little more than half of what Turkmenistan claimed.

Unless the extra gas was taken by Russia as a transit fee, Turkmenistan's exports would appear to be much less than it has said. In any case, Ukraine's rising debt calls the benefit into question.

The report from Ukraine also shows that the country has decreased its gas consumption by 4.3 percent while increasing its imports by a similar amount, a sign that it is meeting more of its needs with unpaid import debt.

Even assuming that Turkmenistan's higher figures are correct, the country seems likely to fall far short of Niyazov's announced goal of exporting 57 bcm of gas in 2002. In order to reach that target, Turkmenistan would have to more than triple its rate of exports in the last three months of the year. (RFE/RL)

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