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Russia: Chechnya And Turkmenistan Stake Claims To Transit Gas

Moscow, 20 January 1998 (RFE/RL) -- Separate events last week, in Turkmenistan and Chechnya, indicate that, in 1998, Russia will likely experience difficulties in maintaining its control over the lucrative export of energy resources to the West.

Chechnya's President Aslan Maskhadov, who is also Prime Minister of the Caucasus republic, last week completed the reshuffle of his government, approving a 24-member cabinet formed by former guerrilla commander Shamil Basayev. Maskhadov, in a bid to bring stability to Chechnya, had decided earlier to extend Basayev's powers as acting Prime Minister for six months. This time period, Basayev said, would be enough for a new cabinet to bring rising crime under control, and improve the economy. Chechnya has been plagued by lawlessness and economic chaos following the 1994-96 armed conflict with Moscow.

Among other members of the reduced cabinet, Basayev named his younger brother, Shirvani, Chairman of the State Committee for Fuel and Energy, giving him control over the only profitable industry in the republic. This control extends to the Chechnya section of pipeline carrying oil from the Caspian Sea to the Black Sea.

Moscow observers note Shirvani Basayev has no experience in the oil sector, unlike the former head of Chechnya's oil industry, Khodzh-Akhmed Yerikanov, dismissed by Maskhadov last year. However, in a telephone interview with RFE/RL in Moscow, the press-secretary of Russia's state-owned Transneft pipeline monopoly, Aleksei Skvarzov, said the appointment of Chechen officials, in charge of negotiations with Russia, would allowed the resumption of oil negotiations between Moscow and Chechnya.

Oil industry analysts last December expressed concern about the future of the pipeline transit across Chechnya. They said there were no signs that a transit-fee agreement between Transneft and Chechnya, which expired on December 31, was being extended. Russia's Energy and Fuel Minister Sergei Kirienko said, as the year ended, that Russia and Chechnya were negotiating a new transit-fee agreement for the transport of oil from Azerbaijan's Caspian Sea shelf across Chechnya.

So-called "early oil," or limited-production, from the Caspian started flowing in November. Moscow and Grozny concluded difficult talks in September on the transit of Caspian oil through Chechnya's pipeline section, which consists of about 150 kms stretching from Azerbaijan's capital, Baku, to Russia's Black Sea port, Novorossiisk.

Under the interim transit deal, a tariff of 43 cents per ton was established. The Chechen side had demanded $2.2 per ton. Moscow insisted that 43 cents per ton is the normal transit fee for oil sent by pipeline across Russia. Moscow ignoring Chechnya's request to be treated as an independent partner in the deal, instead of one of the 89 'subjects' of the Russian Federation.

And now, Transneft's Skvarzov says, "No oil is flowing trough the pipeline at the time being."

In a separate development, in the Turkmenistan capital, Ashgabat, last week, Turkmen President Saparmurat Niyazov and Russia's Prime Minister Viktor Chernomyrdin failed to reach agreement on resuming Turkmen natural gas exports to the West through Russia. These shipments were suspended by Niyazov in March, 1997.

Analysts say that Turkmenistan's economy, largely depending on revenues from the expert of gas resources, has been heavily damaged by the decision. Niyazov complained of unfair treatment and implied, as leaders of other former Soviet states have increasingly done, that Moscow is consistently trying to keep its privileged economic and political position and monopolize energy markets, before giving fellow CIS members the chance to get their fair shares. Niyazov said CIS markets currently buy gas from Russia at 80 dollars and, therefore, Russia would "cash in on Turkmenistan more than we ourselves."

Despite the complains, Niyazov, is a former Soviet Communist Party leader and boasts of an old friendship with Chernomyrdin. Niyazov said he hopes Russia will take part in the construction of a gas pipeline to Turkey via Iran, and a pipeline to Pakistan.

Western interest in Turkmenistan's gas, as well as in Caspian Sea oil resources, is strong. However, some analysts say Niyazov "fell into his own trap," because, by offering privileged positions to Turkey and Iran - countries with traditional strong ties to Russia - he failed to create alternative levers to manipulate to influence Moscow.

The Chairman of Russia's oil monopoly Gazprom, Rem Vyakhirev, said that reaching a transit agreement would require "at least" one month, and expressed the hope that a final agreement would be signed in March, when President Boris Yeltsin visits Asghabat.

However, Russian media warn that Russia needs better to target its foreign and economic policy, in order to protects its interests. The financial Moscow daily "Russky Telegraph" wrote that a possible alliance of Turkmenistan with Western competitors of Gazprom could further complicate the gas issue to Russia's detriment. And, observers are skeptical compromises can be found on pending energy agreements with Turkmenistan and Chechnya. The issues, particularly with Chechnya, are economically, politically - and, emotionally charged.

Maskhadov's decision to empower Basayev has alarmed those in Moscow, who regard Basayev as an extremist with no negotiating skills and little patience. Russia's chief prosecutor Yuri Skuratov has said that a warrant is still valid for Basayev, who led the 1995 hostage-taking operation in the Southern Russian city of Budyonnovsk, in which more than 100 people were killed.

The Kremlin has reacted cautiously to Basayev's appointment. Yeltsin's press-secretary Sergei Yastrzhembsky said that the President's reaction to the appointment is "far from unequivocal." Yastrzhembsky added, however, that Yeltsin "approves of the recent activation of contacts" of Security Council Secretary Ivan Rybkin and other Russian officials with the new Chechen government.

Yeltsin today chided Russia's Interior Minister Anatoly Kulikov, who has called for preemptive military strikes against Chechen "bandits," for not agreeing, in advance, on the wording of the statement. However, Yeltsin did say he was "close" to Kulikov's positions. But Yastrzhembsky told NTV TV that the President was "simply agreeing with Kulikov on the necessity to crush terrorism." Yastrzhembsky added that, concerning Chechnya, Yeltsin "supports the line of conducting peaceful negotiations with Chechen officials."