Moscow’s arrogance leads to Turkmen gas flowing towards China
Once it is in full operation in 2013, the US$ 20 billion pipeline will stretch 1,883 kilometres. It will have a capacity to deliver 40 billion cubic metres a year to China’s Xinjiang province, through Uzbekistan and Kazakhstan. A deal between China National Petroleum Corporation (CNPC) and KazStroyService will however allow Kazakhstan to keep 10 billion cubic metres.
Chinese President Hu Jintao, his Turkmen counterpart, Gurbanguly Berdymukhamedov, as well as the Presidenta of Kazakhstan, Nursultan Nazarbaev, and Uzbekistan, Islam Karimov, were present at the inauguration ceremony of the Trans Asian Gas Pipeline (TAGP) in Saman-Depe.
This structure is a very important element in Asia’s energy equation, especially since it is the first to bypass Russia.
For Turkmen President Berdymukhamedov himself, the pipeline is more than about economics, it is a signal to Russia that Turkmenistan wants closer ties to China, one of the guarantors of global security.
Why did Moscow’s relations with its former satellites sour? Its arrogance. In July 2008, Gazprom signed an agreement to buy Turkmen gas at higher, European prices, but in April of this year, the Russian energy giant shut down Turkmen supplies after a gas pipeline exploded in that country.
For the Turkmen, Moscow was behind the incident because it reduced pressure in the pipeline, causing the explosion. This came after Turkmenistan increased gas prices and threatened to ban its resale, which would have made the gas deal worthless from Gazprom’s perspective.
After months of tensions, Moscow relented and allowed the gas to flow again, but the atmosphere between the two countries was no longer the same.
China is taking advantage of Russia’s arrogance, profiting from a softer but more incisive diplomacy. Beijing gave Ashgabat a US$ 4 billion loan this year.
The CNPC is the only foreign company with exploration rights in Turkmenistan’s gas fields.
Russia’s Gazprom has failed to invest in the country, choosing instead to get cheap Turkmen gas in order to resell it at a higher price. Now however, Moscow’s approach is showing its limits, Vitaly Bushuyev, head of the Energy Strategy Institute, said.