Turkmen Report: December 2, 2000

December 1, 2000

Turkmen President Saparmurat Niyazov underscored his foreign and domestic policy directions during a public lecture delivered at the Rukhiyet Palace on the fifth anniversary of a United Nations resolution acknowledging Turkmenistan�s avowed neutrality. In opposing CIS integration, Niyazov said Turkmenistan was trying to stand up for its financial interests thereby preventing the country from becoming �a donor of raw materials.� He termed Turkmenistan�s involvement in ECO integration �more fruitful,� seeing Turkmenistan as a potential economic bridge between the CIS and ECO. On domestic affairs, Niyazov termed it �impossible� to artificially create a multi-party democratic system, noting that �no one can harvest an unripe field.� Niyazov addressed a 3,000 strong audience comprised mainly of students, representatives of social organizations, heads of ministries and departments. (RFE/RL Turkmen Service, Itar-Tass)

December 1, 2000

Claiming it would violate Turkmenistan�s status as a neutral state, Turkmen President Saparmurat Niyazov declared that Ashgabat would not participate in a proposed joint CIS anti-terrorist center. "By obtaining the international recognition of its permanent neutrality status five years ago, Turkmenistan obtained security guarantees from the United Nations and can count on them under any unforeseen circumstances,� Niyazov claimed. He ruled out involvement in the development of the CIS security system noting that �it will be regarded by the international community as a deviation from its [Turkmenistan�s] commitments and may affect [the] prestige of the young state.� Niyazov did not attend the 1 December CIS leaders summit in Minsk, noting that the agenda held no interest. (RFE/RL, Itar-Tass, AFP)

November 30, 2000

Beginning December a new quarterly publication will be published by the Institute for the Cultural Heritage of Turkmenistan in three languages, Turkmen, Russian and English. A presidential decree on the subject said that the magazine, entitled Miras (Heritage), is to disseminate knowledge about the cultural heritage of the Turkmen and undertake profound study of their great past. Annagurban Ashirov has been appointed editor-in-chief of the new magazine. (Turkmenistan.ru)

November 30, 2000

London-Dublin-based Dragon Oil plans to drill the first of three new appraisal wells at its Cheleken field in the Caspian Sea offshore Turkmenistan in December, Platts reported this week. The respected oil industry publication noted that earlier plans called for drilling to start in July. UK-listed Dragon, which is majority-owned by Emirates National Oil Co, has a 50% stake in the offshore Block 2 concession, which includes the Cheleken-2 field. Cheleken is currently producing 7,500 barrels per day. Half that volume is exported to Iran via a swap arrangement whereby Iran consumes the Turkmen oil in the north and exports an equivalent value of oil from the south. Dragon Oil's plans for Cheleken call for production to be boosted to 40,000-50,000 b/d by 2004. (RFE/RL)

November 30, 2000

In a letter to Turkmen President Saparmurat Niyazov, RSF protested the arrest and imprisonment of journalist Nikolai Nikolaevich Gherasimov. RSF asked to be kept informed of the reasons behind the journalist's incarceration. "We emphatically protest Gherasimov's incarceration, and remind you that the sentencing of a journalist to a prison term runs counter to every democratic principle," stated Robert M*nard, the organisation's secretary-general.

According to information collected by RSF, Gherasimov was arrested on November 7, 2000 and imprisoned in the city of Krasnovodsk. The journalist is the correspondent for the Azerbaijan Azerpress news agency and has worked for the newspapers "Akhal Durmushi" (Akhal's Life) and "Neytralniy Turkmenistan" (Neutral Turkmenistan), as well as the recently closed labour newspaper "Khalk Sesi" (The Voice of the People). Gherasimov was allegedly sentenced to a five-year prison term for "fraud" after a speedy trial. The details of the charges against him are unknown.

RSF recalls that there is no press freedom in Turkmenistan. Communications with the country are very difficult to establish, as they are controlled by a self-proclaimed president. E-mail and fax communications are controlled by the authorities. (IFEX, RSF)

November 29, 2000

Energy issues and debt repayment were the foci of discussions between Armenian President Robert Kocharyan and his Turkmen counterpart, Saparmurat Niyazov in Ashgabat, according to a joint communique issued after the meeting. Armenia offered to help Turkmenistan explore and develop hydrocarbon resources in the Turkmen sector of the Caspian Sea by sending experts. Turkmenistan, for its part, pledged to provide Armenia with electricity. Documents for long-term supplies of electricity should be ready for signing by January 1, 2001. Both countries also declared their interest in what was termed a single energy system including Turkmenistan, Iran and Armenia. At issue appears to be transfer of Turkmen electrical power and natural gas to Armenia via Iran. During Kocharyan�s 1-day visit the two sides signed a treaty on legal assistance and legal relations in civil, family and criminal cases and a memorandum on the restructuring of Armenia's $12.5 million debt for Turkmen gas supplies in 1994-1995. Armenia will pay off the debt between 2001-2004. Transit fees through third countries caused a suspension of Turkmen gas supplies to Armenia in 1997. Prior to that Armenia received about 2 billion cubic meters of Turkmen natural gas annually. (RFE/RL, Itar-Tass, AFP, ACSNA, Turkmen TV)

November 29, 2000

Unidentified Turkmen law enforcement authorities were informed that a bomb planted on the plane of Armenian President Robert Kocharyan would explode upon its arrival in Ashgabat. The plane landed without incident, however. (Turkmenistan.Ru)

November 28, 2000

Turkmen President Saparmurat Niyazov signed a resolution clearing the way for Canadian Termo Design Engineering Ltd. and Turkmenistan state-owned Turkmengaz to design and build a turn-key unit for the production of liquefied gas at the Naip deposit in Turkmenistan. The $25 million project will be funded by Turkmenistan State Fund for the Development of the Oil and Gas Industry and Mineral Resources. Termo is to receive advance payment of $5 million. The planned unit will be capable of processing 9 million cubic feet of gas per day. According to the resolution, Turkmengaz, Termo Design Engineering Ltd. and its subsidiaries are exempt from payment of all types of taxes, excise duties, exchange and customs tariffs and charges while carrying out the project. (Interfax)

November 28, 2000

Turkmen President Saparmurat Niyazov signed a resolution clearing the way for two German companies and Turkmen state-owned Turkmenneftegaz to sign a contract for the reconstruction of an L35\11-300 catalytic reforming unit at Turkmenbashi Oil Refinery (formerly Krasnovodsk Oil Refinery). Germany�s Maschinen und Anlagenbau Grimma GmbH and IAB Ingeneur und Anlagenbau GmbH will undertake the EUR 14 million job, with funding coming from the Turkmenistan State Fund for the Development of the Oil and Gas Industry and Mineral Resources. According to the resolution, Turkmenneftegaz and the German companies are exempt from payment of all types of taxes, excise duties, exchange and customs tariffs and charges while carrying out activities connected with the project. (Interfax)

November 28, 2000

Charging them with incompetence, Turkmen President Saparmurat Niyazov severely criticized his top economists and finance officials, sacking Deputy Minister of Economics and Finance in charge of entrepeneurship and private ownership, Gilichdurdi Taganov and Deputy Minister in charge of taxes and credits, Serdar Bairiev. Others that were dismissed were not named. (Turkmen TV)

November 28, 2000

Turkmen Presidential Envoy on Caspian Sea affairs Boris Shykhmoradov declared that Turkmenistan and Iran maintain identical stances on the Caspian Sea. Shykhmoradov said Ashgabat welcomes Tehran�s proposal to hold a meeting of the littoral states of the Caspian Sea at the deputy foreign ministerial level that could be a prelude to a summit of the heads of littoral states. He also stressed that Ashgabat, like Iran, believes that the sea should be divided fairly and the division should apply both to the surface waters and seabed. Shykhmoradov also argued that no military fleet should ever be present in the Caspian Sea. (IRNA)

November 27, 2000

Turkmenistan and Iran are working on new agreement that would increase Turkmen natural gas deliveries to Iran via the 200-km long Korpedzhe-Kurt-Kui gas pipeline, according to Ali Ahani, Iranian Deputy Foreign Minister and Iran�s special envoy on Caspian Sea issues. Ahani�s remarks were made after he met with Turkmen President Saparamurat Niyazov to discuss the expansion of trade and economic ties, and Caspian Sea legal issues, in Ashgabat. A special working group has been tasked with drafting documents on boosting natural gas deliveries. Neither volumes nor prices have been identified. The 8 billion cubic meter capacity Korpedzhe-Kurt-Kui pipeline is the first and only such infrastructure built between a former Soviet republic and the outside world. Operational since 1997, deliveries have remained anemic, around 2 billion cubic meters so far this year, reportedly due to production problems on the Turkmen side. (IRNA, Itar-Tass, ACSNA)

November 27, 2000

Turkmenistan has started erecting the first of 230 pylons, part of a $2.5 million power project designed to supply electricity to Afghanistan�s bordering Jowzjan province. The 110 kV transmission line is expected to be 72-km in length. (AFP, Bakhtar)

November 25, 2000

Turkmenistan and Iran signed a memorandum of mutual understanding outlining Ashgabat�s readiness to supply gas to the largely ethnically Turkmen Iranian border town of Daragaz. The co-chairmen of the bilateral commission for economic cooperation, Turkmen Deputy Prime Minister Khudaikuly Khalykov and Iran's Transport Minister Mahmoud Hojjati, inked the memorandum after the fifth session of the commission ended in the Turkmen capital. (Itar-Tass)

By Michael Lelyveld, RFE/RL

November 29, 2000

Turkmenistan's President Saparmurat Niyazov may be on the verge of a deal to sell more gas to Iran in exchange for taking Tehran's side in its dispute over dividing the Caspian Sea.

Last Friday in Ashgabat, Iranian Transport Minister Mahmoud Hojjati and Turkmenistan Deputy Prime Minister Khudaikuly Khalykov signed a memorandum of understanding that would reportedly increase exports of Turkmen gas to Iran. The agreement followed a meeting of a joint economic commission, the Iranian official news agency IRNA said.

Three days later, on Monday, Iran's deputy foreign minister, Ali Ahani, also appeared in Ashgabat to confirm his country's common position with Turkmenistan on dividing the Caspian. The two countries made clear that they oppose a Russian solution to the ownership controversy that has thrown a legal shadow over oil development for the past six years.

At Ahani's previous stop in Baku, he tried to convince Azerbaijan's President Heidar Aliyev not to endorse Russia's formula for a pact among the five shoreline states. The Russian plan calls for dividing only the seabed into national sectors, keeping the water and its surface in common. Kazakhstan has already signed onto Moscow's idea. But Iran objects, insisting it is entitled to 20 percent of both the seabed and the waterway.

In an apparent sign of the emotions that the issue has stirred in Iran, the country's army chief warned Sunday that the military must be ready to repel an attack in the Caspian. Major-General Mohammad Salimi said, "Israeli and NATO forces are in the Caspian sea, as prospecting for oil is in progress at that region," IRNA reported. No such forces in the region are known to exist.

Aliyev had previously indicated that he was preparing to sign a Caspian cooperation agreement with Russia this week during a scheduled visit by President Vladimir Putin. While it is unclear whether Ahani changed Aliev's mind, Putin's trip has now been postponed until January, according to Azerbaijan's AssA-Irada news agency. The delay may be a sign that Baku needs more time to decide, under competing pressures from Moscow and Tehran.

But Niyazov's steady support for Iran's position may be helping it to avoid isolation on the Caspian issue. Still, it remains unclear how grateful Tehran will be.

While the memorandum of understanding calls for increasing Turkmen gas exports to Iran, initial reports said only that Ashgabat would supply gas to the Iranian town of Daragaz. The community, which lies on a secondary road about 12 kilometers from the Turkmen border, is likely to be a very minor market for exports. The reports did not specify what volumes of gas would be delivered or what, if any, price would be paid.

Later reports stated that the two countries plan to draft documents for a more meaningful increase in Turkmen gas exports. These are intended to be ready for a visit by President Mohammad Khatami to Turkmenistan at a date to be fixed "in the next few months."

The prize of a big increase in gas sales to Iran has so far eluded Niyazov, although his support for Tehran in the Caspian may help in striking a deal.

Despite publicity over a pipeline opened between the two countries in 1997, Turkmenistan's gas deliveries have been meager. While it was scheduled to deliver 5,000 million cubic meters of gas to northern Iran this year, it has pumped only 2,000 million so far, IRNA said.

Under an agreement last year, Turkmenistan pledged to deliver 8,000 million cubic meters this year and was negotiating for an increase to 13,000 million. Last March, Niyazov claimed that Iran was ready to accept 30,000 million cubic meters. But his ambitions for exports have proved to be far greater than his abilities.

IRNA reported last May that the National Iranian Gas Company had decided to cut imports from Turkmenistan by half as of April 1. The report cited a dispute with Turkmenistan over the price of the gas, which was being used to repay Iran for its 190-million-dollar cost of building the pipeline from Turkmenistan.

Iranian officials complained that Turkmenistan had failed to make needed investments in its Korpedzhe gas field to feed the pipeline, making supplies undependable. To make matters worse, Turkmenistan was charging Iran 40 dollars per thousand cubic meters in order to pay off its debt for the pipeline. Turkmenistan has been selling gas to both Russia and Ukraine for less. Iran responded by cutting its purchases.

In the past six months, Niyazov has tried repeatedly to mend the rift and boost gas exports, but without success. Even a restoration of the export target of 5,000 million cubic meters could now be seen as a partial victory. But Iran may see no reason to pay any more than Turkmenistan charges to Moscow and Kyiv.

It is unclear whether Niyazov can win the even greater prize of pumping gas through Iran to Turkey in order to meet his commitment to supply 16,000 million cubic meters a year to Ankara and 14,000 million more to Europe. In light of Turkmenistan's current low level of exports through Iran, the chances seem remote.

In October, Niyazov also pledged to the Turkish president, Ahmet Necdet Sezer, that he would support a plan for a trans-Caspian pipeline for gas deliveries, but there has been no sign of activity. For the moment, Niyazov seems intent on pursuing his Caspian strategy with Iran.



December 1, 2000

Participants at the 16-18 November Turkish Oil and Gas Congress (TIOG) learned more about Turkish and other perceptions of Turkmenistan's ill-starred flirtation with the export of its gas by subsea line and across Azerbaijan and Georgia to Turkey.

Turkish Minister of Energy and Natural resources, Cumhur Ersumer warned that TCP is not dead but the "possibility looms that Turkmenistan may postpone the project," according to an article earlier this week in oil industry trade publication Platt�s.

At TIOG, Azerbaijan, which represents a competitor with Turkmenistan for the Turkish natural gas market, blamed Ashgabat for failing to respond to draft contracts sent by Azerbaijan, thereby delaying the project. Shell's man in Turkey, Sybe Vesser, for his part said "complex politics" slowed the project. Will James, the Tbilisi representative of PA Consulting was more forthright saying that Turkmenistan's leaders had indulged in "dangerous time-wasting and gamesmanship."

TCGP appeared to hit the rocks earlier this year, following the withdrawal of PSG - uniting GE Capital and Bechtel - after Turkmen President Saparmurat Niyazov failed to decide on the TCGP partners' "best and final offer" for the 30 billion cubic meter line.

A further sign of Turkey's downgrading of TCGP came last week when that country's giant Koc group established a gas trading and marketing joint venture with Shakh Deniz member Statoil. Last year, Koc held negotiations over involvement in the PSG venture.

While it is widely known that the Trans-Caspian Pipeline project, heavily supported by the US and Turkish governments, failed to develop any momentum, fewer realize that Turkmen officials, were cool to the subsea project when the concept was first tabled in the early 1990s. They preferred to see exports move overland through Iran. Only because that road was closed due to US policy toward Iran, did Ashgabat flirt with the subsea project.

Most recently, Turkmen officials have openly termed the project a dead letter. Some gas industry observers contend believe Turkmenistan and Royal Dutch Shell foresee an end to the US sanctions on Iran, making viable the commercially and logistically superior overland Trans-Iranian route.