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Turkmenistan: President Seeks Gas Export Role

As a long-running feud delays progress on a trans-Caspian gas pipeline, Turkmenistan President Saparmurat Niyazov is trying to promote gas exports to Russia instead. But the move may be fraught with problems, as RFE/RL correspondent Michael Lelyveld reports.

Boston, 23 February 2000 (RFE/RL) -- Turkmen President Saparmurat Niyazov appears to be turning to Russia after failing to agree with Azerbaijan on a trans-Caspian gas line.

Last week, Niyazov told diplomats that he would not agree to Azerbaijani demands for half the capacity of the planned pipeline to Turkey because Turkmenistan's share would not pay for its construction costs.

"We cannot make some sort of compromise which would be to the detriment of our economic interests and which was proposed for political reasons," he said.

Instead, Niyazov announced he would negotiate with Gazprom's chief executive, Rem Vyakhirev, on increasing gas sales to Russia. Ashgabat wants to raise exports from the current level of 20 billion cubic meters to 50 billion cubic meters a year.

Niyazov said the country's northern pipeline connection to Russia could handle up to 100 billion cubic meters, or 25 percent more than the country's total exports at their peak in 1991. The only question was the price, Niyazov said.

The Turkmen leader wants to raise the charge from $36 per 1,000 cubic meters, which Niyazov reluctantly accepted after a two-year row with Gazprom over prices and a virtual cutoff in 1997.

"Price remains an issue. Those who pay $36 per thousand cubic meters, can pay $46 as well," he said, according to Interfax.

But Niyazov's comments may have been aimed at Washington as much as at Moscow. His talks with Gazprom started on the same day that a contract with a U.S.-led consortium for the trans-Caspian project was due to expire.

The venture by PSG International has been stalled for months over Azerbaijan's demands for access to the line so that it could sell its own gas to Turkey. In another sign of the problem, Turkmenistan and Royal Dutch/Shell said Friday that a production sharing agreement for gas to supply the trans-Caspian pipeline had been postponed.

The latest blow appears to have been last week's announcement by Shell's rival, BP Amoco, that it would press ahead with Azerbaijani exports of gas to Turkey from the Caspian offshore field known as Shah Deniz. BP Amoco said it would use "a combination of new and existing" pipelines, suggesting it would not need the trans-Caspian line.

But instead of dropping its demands, Azerbaijan has apparently pressed them. Last week, President Heidar Aliyev rejected Niyazov's offer to use the trans-Caspian line for 3 billion to 5 billion cubic meters of exports. Azerbaijan has said it needs 16 billion cubic meters of capacity.

It now appears that Baku will stick to the demand, even though it previously said it needed the capacity for Shah Deniz. Although BP Amoco plans to use other lines, Azerbaijan will apparently use its geographical position to block the trans-Caspian project.

The BP Amoco plan may be especially frustrating for Niyazov because it took place while Aliyev was visiting the United States. The administration of President Bill Clinton was evidently unable to convince Aliyev to ease his stand and allow the trans-Caspian project to proceed.

By negotiating with Russia, Niyazov may be telling Washington that its Caspian policy is now at risk because of Aliev's lack of cooperation. If Clinton cannot get Aliyev and Niyazov to shake hands across the Caspian, Turkmenistan will offer its resources to Russia, he seems to be saying.

While such a move may have implications for U.S. aims in Central Asia, it could also entail problems for Turkmenistan. Earlier deals with Russia have been marked by complaints about bartered goods used in payment, as well as the destination of Turkmen gas.

It is not clear, for example, that Turkmen gas sold to Russia would be used to meet either country's commitment to supply Turkey. Vyakhirev has already said that gas for Russia's Blue Stream pipeline across the Black Sea to Turkey would come from north Tyumen fields in western Siberia. In the past, Gazprom has channeled Turkmen gas to Ukraine, leaving Ashgabat with unpaid debts.

It may also be hard to exercise leverage over prices without competition from a trans-Caspian alternative. Any agreement by Gazprom to grant greatly higher prices would be a political favor that Russia could not afford for long.

By turning to Russia, Niyazov is also ignoring his dispute with Azerbaijan over ownership of Caspian oilfields and the role it has played in the conflict. Azerbaijan appears to be using its power over the trans-Caspian project to gain a concession in the Turkmen claim to oilfields on the border.

The feud may only get worse unless it is resolved. But there may also be implications for Azerbaijan in using the tactic. By blocking Turkmenistan from reaching Turkey, Baku is forgoing transit fees and the continuing leverage over Ashgabat it would have as a host to its pipeline.

That choice could prove short-sighted if Turkmenistan eventually reaches Turkey through either Russia or Iran. In the meantime, Moscow appears free to take advantage of Caspian discord.