Countries vie for access to Turkmenistan’s huge gas deposits
On Afghanistan’s northwest border lies Turkmenistan, a country with immense reserves of natural gas – the fourth largest in the world, according to the International Energy Agency. These gas reserves are of vital interest to the United States. Last January, three high-level Americans visited Turkmenistan’s President Berdimuhamedov. First came Senator Richard Lugar, senior Republican on the Senate Foreign Relations Committee. Next was Admiral William J. Fallon, at that time in charge of U.S. Central Command. Then came Ambassador Steven Mann, Coordinator for Eurasian Energy Diplomacy. The topic for discussion: economic and energy cooperation. Mann returned again in February for follow-up talks on long-term partnerships with U.S. corporations.
Canada’s oil patch is scouting for business, too. In February, former Canadian Prime Minister Jean Chrétien also called on the Turkmenistan President. Accompanying him were executives of an Omani-Canadian company called Buried Hill Energy. Buried Hill has a licence to explore and develop a gas field in the Turkmenistan section of the Caspian Sea.
Turkmenistan is one of five Central Asian states that became independent in 1991 when the Soviet Union broke up. It is almost half the size of Ontario and has a population of more than 5 million. It shares land borders with Iran, Afghanistan, Uzbekistan, and Kazakhstan. In addition, it has more than 1,700km of coastline on the Caspian Sea, a body of water about 20 times the size of Lake Ontario. The Caspian has major petroleum reserves that are of high importance to littoral states and world markets.
Turkmenistan is far from the world’s oceans, so it must rely on pipelines to get its gas to market. Pipeline routes are important in the same way that railway lines were important in the 19th century. They connect trading partners and influence the regional balance of power.
Until recently, Turkmenistan’s gas flowed out only through Russia. Since the early 1990s, however, competing world powers have vied to move this gas in other directions. This rivalry is called the New Great Game, an update of the 19th century Great Game in Central Asia between the Russian and British Empires.
Russia remains a key player. In 2007, it signed an agreement with Turkmenistan and Kazakhstan to build a new pipeline that would parallel an older one and add to the export network. Other countries are getting in on the action. China has started building a gas line from Turkmenistan via Kazakhstan, a huge undertaking. And the United States wants pipelines built under the Caspian to bring Turkmenistan gas to Azerbaijan, where it would link with recently-built pipelines to Turkey and on to Europe.
The U.S. favours pipeline routes that bypass Russia (an energy superpower) and Iran (an energy-rich state on America’s enemy list). It has been working for more than a decade to move Turkmenistan gas south. The route would follow the ancient trading route from Central to South Asia. It would run from the Dauletabad gas-field in Turkmenistan along the highway through Herat, Helmand and Kandahar in Afghanistan; to Quetta and Multan in Pakistan; to Fazilka in India.
The proposed pipeline project (called TAPI after the initials of the four participating countries) is prominently discussed in the Asian press. Its sponsor is the Asian Development Bank (ADB), a cousin of the World Bank. A main stumbling block has been the lack of security in Kandahar and Helmand.
Neverthetheless, formal agreements were signed by the four participating countries on April 24, 2008, in Islamabad. The ADB presented an update of the feasibility study made three years ago, and disclosed that the estimated capital cost has doubled to $7.6 billion. Turkmenistan promised independent certification of the gas that would be available for the TAPI pipeline. Pakistan’s new Prime Minister described the pipeline as a vital project for the development and progress of the region.
There is a rival pipeline project to bring natural gas from Iran to Pakistan and India. Oil ministers of India and Pakistan met on April 25, 2008 (just after the TAPI meeting) to resolve a pricing squabble and clear the way for signing agreements. The President of Iran visited Islamabad and New Delhi the following week for talks on the pipeline. This happened despite strong U.S. pressure on India and Pakistan to abandon the project and go for the line through Afghanistan.
President Berdimuhamedov says he’s committed to multiple export routes: north to Russia, east to China, south to Pakistan and India via Afghanistan, and possibly west to Europe via the Caspian Sea. Significantly, last April, he met with U.S. President George Bush to discuss gas export policy, and with Afghanistan President Karzai to review the TAPI pipeline project. That was at the NATO Summit in Bucharest, Romania.
The U.S. is open about the geopolitical importance of Central Asia. Richard Boucher, Assistant Secretary of State for South and Central Asian Affairs, in recent testimony to the House Committee on Foreign Affairs, stressed the importance of Central Asia to the “long-term stability of Afghanistan.” He noted that the U.S. has “ambitious policy objectives in the region.” He said the U.S. “is working to facilitate multiple oil and gas export routes” and “has been active in promoting private energy sector investment in the region.”
Turkmenistan has a strategic location in Central Asia. It offers a hub for pipelines to export natural gas north, south, east, and west. Energy companies know this. They operate behind the scenes until deals are signed. Billions of dollars are involved.
But there’s more at stake than opportunities for energy companies. TAPI would boost the economies of all four countries. It would provide export revenue to Turkmenistan and transit revenue to Afghanistan–revenue that could be used for schools, infrastructure, and other development. These revenues are critical to sustain development efforts.
Pipelines are also potentially good for peace. As President Berdimuhamedov said recently, “The pipeline between Turkmenistan, Afghanistan, Pakistan and India will be a weighty contribution to the positive cooperation on this continent.”
Prime Minister Stephen Harper describes Canada as an “emerging energy superpower.” Turkmenistan is another emerging energy superpower, with proven gas reserves larger than those in Canada. Turkmenistan was little known during the 20th century when it was part of the Soviet Union, but now it’s a vortex of activity–a major energy player.
John Foster is an international energy economist with 40 years of worldwide experience in energy and international development with two oil companies, British Petroleum and Petro-Canada, and two international banks, the World Bank and Inter-American Development Bank. He now lives in Kingston, Ontario.
