Germans in groundbreaking Turkmen deal
By Vladimir Socor
German energy giant Rheinisch-Westfaelische Elektrizitaetswerk (RWE) this month
entered what could become a breakthrough agreement with Turkmenistan on
offshore gas field development and gas deliveries.
RWE board chairman Juergen Grossmann and Yagshgeldi Kakayev, head of the
Turkmen State Agency for the Management and Use of Hydrocarbon Resources
(attached to the office of President Gurbanguly Berdimuhamedov), signed the
long-term framework agreement in Ashgabat on April 16.
This move has the potential to become a breakthrough in terms of Western access
to Turkmen gas reserves, advancing the EU-planned Southern Corridor - including
the Nabucco project - via
Azerbaijan and Georgia to Europe, and emancipating Turkmenistan in due course
from Russian Gazprom's monopsony. RWE is a partner in the Nabucco consortium.
Under the agreement, RWE and Turkmenistan will examine and consult with each
other on possibilities for initiating deliverers of Turkmen gas to Germany and
Europe. The sides will establish a long-term partnership to transport Turkmen
gas to the country's border and export it to international markets.
Furthermore, under the agreement, RWE will explore and develop gas resources on
Turkmenistan's continental shelf in the Caspian Sea. According to Turkmen
officials at the signing event, Turkmenistan has assigned its offshore Bloc 23
to RWE as an initial step, with further blocs possibly to be added. Exploration
work is expected to start during the course of this year. RWE will also provide
technical training for Turkmen specialists, of whom a 20-strong group is
scheduled to arrive in Germany already this month.
In his remarks at the signing in Ashgabat, Grossmann indicated obliquely that
the transport solution to Europe will involve a trans-Caspian pipeline link,
which would lead to Azerbaijan and farther westward.
The agreement with RWE is Turkmenistan's first with a major Western company. Up
until now only the small, British-Arab jointly owned Dragon Oil (as well as
Petronas of Malaysia, at Bloc 1) had been licensed to drill for Turkmen oil and
gas offshore. The Russian company Itera had signed two years ago a memorandum
of understanding with Turkmenistan for exploration and development of Blocs 21
and 22, but that agreement has not been finalized thus far. There is still no
Western involvement in Turkmenistan's onshore gas field development, but such
involvement seems entirely realistic now after the RWE agreement and with
Berdimuhamedov's growing openness to the West.
RWE is Germany's largest energy producer and supplier overall (nuclear, natural
gas, electricity) and second-largest natural gas supplier in the country (after
EON Ruhrgas). Unlike Ruhrgas or the BASF subsidiary Wintershall, the
Essen-based RWE does not have strategic interests in Russia generally and is
not burdened with overdependence on Russian gas.
With its more diversified portfolio of gas imports, RWE joined the EU and
US-backed Nabucco project one year ago. In November 2008, RWE and the Austrian
OMV (initiator of the Nabucco project) created the Caspian Energy Company (CEC)
to develop trans-Caspian solutions for delivery of Turkmen and other Central
Asian gas to Europe. The London-based CEC is open to participation by other
companies, particularly gas-producing ones.
This initiative is closely connected with the EU Commission's initiative
(launched also in November 2008) to expand the initial Nabucco concept into a
far more ambitious Southern Corridor, which would include a trans-Caspian link.
Toward that goal, Grossmann and other RWE executives held talks in Turkmenistan
persistently in recent months and opened an RWE office in Azerbaijan.
The RWE-Turkmen agreement strengthens the case for Nabucco; marks an early step
toward implementation of the Southern Corridor; and opens prospects for
diversifying Turkmenistan's export routes as well as Germany's and Europe's gas
import sources, away from dependence on Russia in both cases. The trans-Caspian
pipeline link can be achieved either as a coast-to-coast project (which Russia
staunchly opposes, although it has no real means to stop) or, as an alternative
option, can be achieved incrementally by connecting Turkmenistan's and
Azerbaijan's offshore infrastructure, a short distance from each other in the
center of the Caspian Sea.
The April 16 agreement follows (but was not caused or precipitated by)
disagreements erupting publicly between Ashgabat and Moscow. Their negotiations
on expanding the capacity of Turkmenistan-Russia pipelines - and, thus,
Russia's future intake of Turkmen gas- failed in late March. Consequently, on
March 27, Berdimuhamedov instructed his government to prepare an international
tender for modernization of Turkmenistan's existing energy transport systems
and construction of new ones.
The new systems would deliver Turkmen energy resources to world markets - that
is, bypass Russia. On April 8-9, a Turkmen pipeline carrying gas to Russia blew
up, causing a near-halt in gas deliveries for several days. The Turkmen side is
publicly blaming the explosion on gross negligence by Gazprom and demanding
compensation. Such incidents used to be hushed up in the past. Ashgabat's
decision to go public and challenge Moscow signifies - as does the agreement
with RWE - the onset of a new era in Turkmenistan's policies.
Vladimir Socor is a senior fellow and long-time senior analyst with the
Jamestown Foundation. He was formerly a senior research analyst with Radio Free
Europe/Radio Liberty in Munich, and is a specialist in the non-Russian former
republics of the USSR, CIS affairs and ethnic conflicts.
(This article first appeared in The Jamestown
Foundation. Used with permission.) (Copyright 2009 The Jamestown
Foundation.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
