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Turkmenistan: Energy Demand Forecasts Jeopardize Gas Supply Deals

New forecasts of Turkey's energy demand may be bad news for Turkmenistan, as President Saparmurat Niyazov fails to complete a series of gas supply deals. At the heart of the concerns is skepticism over energy demand forecasts. RFE/RL correspondent Michael Lelyveld reports.

Boston, 29 June 2000 (RFE/RL) -- Questions are increasing over Turkey's needs for new energy sources at a time when a supply deal with distant Turkmenistan has been thrown into doubt.

Turkmenistan appears to be facing delays and disputes on all its possible pipeline routes for delivering gas to Turkey. At the same time, Turkey is showing new signs that it will not need as much gas as predicted, making Turkmenistan its least likely supplier.

For the past five years, Turkey has been seen as a key to energy policy for the Caspian region and Central Asia because of Ankara's forecasts that the country's gas demand would grow more than fourfold by 2010.

Although industry analysts have repeatedly voiced concerns about the assumptions, Turkey has signed a series of agreements for gas supplies from countries that include Russia, Iran and Turkmenistan. Turkey recently opened talks with Azerbaijan to import even more gas.

Turkey has also been pursuing power plant, hydroelectric and nuclear energy projects to cover its expected electricity shortage. But some Turkish experts and international institutions are now questioning whether the government has gone too far.

This week, the Turkish Daily News reported a warning from Ali Tigrel, a former undersecretary of the State Planning Organization, that an oversupply of energy could prove costly to the country's economy. Tigrel, an economist of the Republican People's Party, said the country "will have no serious energy deficit until 2007," adding that there has been no master plan for energy development.

The criticisms appear to be in line with concerns recently voiced by the World Bank following repeated assurances from Turkish officials that the country can use all the gas it can get. The World Bank has tried to discourage Turkey from providing loan guarantees for 23 power plant projects, valued at $4.2 billion, because of fears that they could prove to be an economic liability.

At the heart of the concerns is skepticism over energy demand forecasts.

The Reuters news agency recently quoted an official of the International Energy Agency as saying that Turkey's predictions are "exaggerated." The agency sees the country's gas needs in 2010 as no more than 30 billion cubic meters, instead of the 55 billion cubic meters that has been forecast. Consumption is expected to reach only 15 billion cubic meters this year.

The issue may be vital to Turkmenistan, which signed an agreement last year to provide Turkey with 16 billion cubic meters of gas annually and an additional 14 billion for transit to other countries.

But Turkmenistan has effectively placed itself at the end of the line of likely suppliers by failing to reach deals on any of its possible pipeline routes to Turkey.

Ashgabat negotiated for over a year with a U.S.-backed consortium to build a trans-Caspian gas pipeline through Azerbaijan and Georgia. But Turkmenistan President Saparmurat Niyazov has repeatedly criticized terms of the deal. The consortium has now reportedly warned that it may close down at the end of June.

In May, Niyazov reached an agreement in principle with Russian President Vladimir Putin to more than double Turkmen gas exports to Russia. That deal could allow Turkmenistan to fulfill its pledge to Turkey by shipping gas through Russian lines under Moscow's existing supply contracts with Ankara. But more than a month after the Putin visit, there has been no agreement on a price for Turkmen gas, raising questions about whether the deal is on or off.

Turkmenistan could also deliver gas to Turkey through Iran, which has another contract to supply Ankara. But Niyazov has yet to mend fences since Iran cut its gas imports from Turkmenistan by half in April, apparently in anger over the Turkmen tilt toward Moscow.

The delay on all three of Turkmenistan's possible routes probably could not come at a worse time for Ashgabat. If the lower projections of Turkey's gas demand are correct, the country could easily live without Turkmen gas, more than filling its needs with sources from Russia, Iran and Azerbaijan.

In the race for the Turkish market, Turkmenistan is the most distant and seems the most likely to lose. In addition to distance, Niyazov appears to have fallen even farther behind through delay.