How Central Asia's "hermit kingdom" became the biggest prize in Europe's energy wars.
Each December, Turkmenistan celebrates "Neutrality Day," an official state holiday commemorating the reclusive country’s aspiration to be the Switzerland of Central Asia. But for the first time in nearly a century, Turkmenistan is finally in play. Although the former Soviet republic has languished for decades, EU-Russian energy tensions, the war in Afghanistan, and the power politics of oil and gas have combined to fuel a new "Great Game" in Central Asia. The most coveted prize may be the hermit kingdom of Turkmenistan, which sits atop the world’s fourth-largest reserves of natural gas, a huge amount of oil, and a strategic position in the heart of Central Asia. The United States, the European Union, Russia, China, Iran, and Turkey are all vying for influence in Turkmenistan. The only question is, at whose expense will future gains be made?
Turkmenistan puts a fine point on the age-old puzzle of whether bizarre countries seem to have oil and gas, or whether they are bizarre because they have them. The country was brought through the fall of communism under the dictatorial rule of Saparmurat Niyazov, who renamed himself Turkmenbashi ("Leader of the Turkmen"). Niyazov cared less about his country’s increasing irrelevance in foreign affairs than his domestic projects, such as banning entertainment (from circuses to the opera), renaming the calendar after his family members, and penning a spiritual guide that Turkmen students and civil servants had to parrot to get ahead. When Niyazov died in December 2006, a then 49-year-old former dentist named Gurbanguly Berdymukhamedov ascended to the leadership. Despite promising greater openness and reform, his record has been mostly spotty: Most of the Turkmen population still lives in poverty, and this year Freedom House granted Turkmenistan the dubious honor of "worst" of the 29 post-communist countries it surveyed.
And yet, Turkmenistan has quietly emerged over the past two years as a major priority for the great powers with stakes in Central Asia. This has nearly everything to do with energy. Russia has historically maintained some form of control over nearly all of the oil and gas pipelines leading out of Central Asia. Without Turkmen gas, however, Russia would not have the supplies necessary to fulfill its extensive export commitments to Europe. According to the Jamestown Foundation, Russian state-owned gas giant Gazprom typically purchases about 80 percent of Turkmenistan’s total annual gas exports at its border, after which Gazprom resells them to, or swaps them for other energy or exports with, Ukraine and Europe. This system worked out well enough for both parties for most of the past two decades: Moscow had a guaranteed source of supply, and Ashgabat had a guaranteed buyer for its exports.
This old arrangement began to break down, however, during the global financial crisis. As factories shuttered their doors and production ground to a halt, European demand for Russian-supplied Turkmen gas plummeted. Amid skyrocketing energy prices during the first half of 2008, Gazprom had conceded to paying higher prices for Turkmen gas (from $100 to $130 per 1,000 cubic meters). But by 2009, that now-inflated rate made the bulk purchase of Turkmen gas economically unviable, and Russia found itself locked into a contract with Turkmenistan for huge quantities of gas it could not sell. It was in this context that the major gas export pipeline from Turkmenistan to Russia, through which almost 50 percent of the Turkmen gross national product flows, suddenly exploded this April. Rather than repair it, Moscow simply announced the cessation of all purchases of Turkmen gas — an action that continues to cost Turkmenistan approximately $1 billion a month.
Needless to say, Turkmenistan did not view this incident as an "accident," as Russia claimed. Instead, it saw the explosion as Russian retaliation for Ashgabat’s flirtations with the West and a power play to force the renegotiation of existing gas contracts. Two weeks after the explosion, Berdymukhamedov laid down a new marker: "Turkmenistan," he said, "needs to create a new system of connections with Europe."
The EU states have eagerly reciprocated, seeing Turkmenistan as a new key to escaping their own dependency on Russian energy. Moscow supplies Europe with about a quarter of its gas, 80 percent of which transits Ukraine. After a price dispute between Gazprom and Ukraine in January 2006 led to a gas shut-off that left millions of Europeans shivering during one of the coldest winters in recent memory, the European Union decided it needed to respond (and more vigorously so after another gas cutoff this January froze Eastern Europe for two full weeks). The European Union recommitted to sidestepping the energy bottleneck in Ukraine and expanding direct ties with Central Asian gas suppliers in order to reduce Europe’s reliance on Russia’s energy (and its accompanying political agenda). In return, the European Union offered Turkmenistan something it desperately wants: the promise of energy exports not beholden to a Russian veto.
The solution became known as the Nabucco project — a proposed 2,050-mile gas pipeline, backed by a consortium of companies from five European countries, which would bring Central Asian gas supplies from Turkey into central Europe, bypassing Russia entirely. After a landmark agreement on July 13 between the countries participating in Nabucco, the project looks well on its way to being built, with the big remaining issue simply being where to get all the gas. That’s where Turkmenistan has happily come in. Shortly after the July agreement, Turkmenistan and Azerbaijan began talks to settle a lingering territorial dispute in the Caspian Sea, the resolution of which would allow Turkmenistan to send gas directly to Turkey to fuel the Nabucco pipeline. Presuming success, Berdymukhamedov then announced, to the Kremlin’s fury, that Turkmenistan is prepared to make 10 billion cubic meters (bcm) of gas available annually for Nabucco. A week later, Ashgabat signed a contract granting Caspian Sea exploration rights to a German company that is a member of the Nabucco consortium.
Russia has channeled its anger over these developments into an active effort to undermine growing EU-Turkmen energy ties and the Nabucco pipeline in particular — both of which the Kremlin views as fundamental threats to the viability of its energy industry, as well as unwanted invasions into its geopolitical backyard. In response, Moscow has sent official delegations to Ashgabat almost weekly to crank up the diplomatic pressure. At the same time, Gazprom is pushing an alternative pipeline called South Stream, which would carry Turkmen gas across the Black Sea to Europe, thereby denying Nabucco an essential supply of gas. (Whether this expensive underwater pipeline is economically feasible is a separate question entirely.) Russia is also turning up the pressure on other Central Asian suppliers, like Azerbaijan, to sell their gas to Moscow, not directly to Nabucco.
Amid all this geopolitical jockeying, the United States has been courting Turkmenistan with growing enthusiasm — driven primarily by Washington’s search for new sources of leverage over Russia, its expanding military footprint in the Middle East and Central Asia, and its desire to help its European allies limit their exposure to Moscow’s influence. Still, repairing U.S. relations with Turkmenistan has not been easy. After Niyazov’s death, the United States decided to test the waters, with then-Secretary of State Condoleezza Rice announcing Washington’s hopes of "turning a new page" with Turkmenistan. Thus far, the Obama administration has appeared eager to follow suit. In recent months, a bevy of senior U.S. officials has descended on Ashgabat to dangle the prospect of better bilateral ties and vow steadfast U.S. support for Nabucco, and Turkmenistan’s role in it.
Turkmenistan is also of great geostrategic interest to Washington because it borders Afghanistan and lies close to other U.S. security concerns. The Pentagon has recently confirmed that Turkmenistan is developing into a major transport hub for the northern supply network used to relay nonlethal supplies to U.S. forces in Afghanistan, while NATO is reportedly also seeking to open a land corridor in Turkmenistan to resupply the alliance’s troops in Afghanistan. As nearly all of the supply routes into Afghanistan remain subject to a Russian veto — the multiyear battle to secure rights to the Manas Air Base in Kyrgyzstan being the operative example — a Turkmen alternative is more attractive than ever.
It’s not just Washington, Moscow, and Brussels that are trying to push open new doors in Ashgabat, but also Beijing and Tehran. In June, China and Turkmenistan signed a 30-year gas deal that could increase 40 bcm annually, while work on a 4,350-mile pipeline between the two countries is scheduled for completion by the end of this year. Ashgabat also recently granted permission to develop major gas fields in Turkmenistan to a Chinese state-owned energy giant, a plum generally understood to be a quid pro quo for a multibillion dollar credit line that China extended to Turkmen energy giant Turkmengaz. Iran, meanwhile, has plans to build a gas pipeline with Turkmenistan this year, drawing on supplies from a gas field previously reserved solely for exports to Russia. This deal could nearly double Turkmenistan’s gas exports to Iran, a development that Washington is eyeing with particular interest: Considering Turkmenistan’s historical willingness to sever exports to Iran — as it did in late 2007 and early 2008 — some U.S. policymakers are already talking of this new Turkmen-Iran pipeline as a possible source of future leverage over Tehran.
Turkmenistan is now in the middle of Central Asia’s geopolitical jostling, and its influence continues to grow steadily, alongside estimates of its energy reserves. In early 2008, Ashgabat estimated that Turkmenistan possesses 21 billion tons of oil and 25 trillion cubic meters (tcm) of natural gas onshore, with an additional 12 billion tons of oil and 5 tcm of gas offshore in the Caspian Sea. Newer estimates indicate that this might just be the tip of the iceberg. A recent British audit speculated that Turkmenistan’s yet-untapped South Yolotan-Osman gas field, which the Chinese will soon be exploring, might alone contain between 4 and 14 tcm of gas. Should even the most conservative estimates prove accurate, Turkmenistan could soon become the world’s largest gas exporter after Russia.
History has a way of lifting even the most unlikely countries onto the center stage of world politics, and for Turkmenistan, history is just beginning.