Mon, Nov 23, 2009 page11

• China has its eyes on Turkmenistan

  CAUSE FOR CONCERN? The EU has courted Ashgabat to break its dependence on Russian energy supplies but it may have been outmaneuvered by Beijing

  • AFP
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  Turkmenistan has become the latest target of China’s hunger for energy, spelling danger for Europe’s hopes of making the reclusive gas-rich Central Asian state a major source of its energy supplies.

  Beijing has invested heavily in Turkmenistan this year, loaning Ashgabat billions and eyeing its largest gas field as part of a broader strategy to wrap up Central Asian energy resources to feed its energy-starved industries.

  The EU, which has long courted Ashgabat as a possible direct source of natural gas shipments to break its dependence on Russian energy supplies, has been slow to counter China’s push.

  “There’s no wonder that the Chinese are moving rapidly,” Richard Jones, deputy executive director of the International Energy Agency (IEA) said on the sidelines of a energy conference in Ashgabat.

  “They’re moving all over the world in oil and gas and even coal,” he said.

  “Right now ... the Chinese have a progressive leadership and they’re doing things more quickly than Europe, which isn’t a country, it’s a consortium of 30 countries,” Jones said.

  GAS RESERVES

  Turkmenistan, an isolated and repressive ex-Soviet republic bordering the Caspian Sea, is believed to hold the world’s fourth-largest reserves of natural gas, although comprehensive studies of its fields have not yet been concluded.

  Ruled for two decades by eccentric dictator Saparmurat Niyazov, who died in 2006, Turkmenistan failed to invest in either production or diversifying export routes, spending instead on one of the world’s most lavish personality cults.

  This left Moscow with a near monopoloy on Turkmen energy exports through its network of aging Soviet-era pipelines, a problem highlighted when a pipeline explosion earlier this year ground exports to a halt.

  Russian energy-giant Gazprom, which uses Turkmen gas to boost its supplies to Europe, has insisted on lower prices from Turkmenistan as demand from its EU customers has plummeted as a result of the global financial slowdown.

  MONEY DRAIN

  Ashgabat is believed to have been losing as much as US$1 billion a month on exports during the row, which had raised hopes that the reclusive state might be more receptive to offers from Western energy firms.

  Turkmenistan has also long been a proposed supplier for the stagnated Nabucco project, a trans-Caspian pipeline, which would theoretically deliver Turkmen gas to the heart of Europe, allowing it to bypass Russia.

  But while Europe has struggled to overcome the political and technical stumbling blocks of Nabucco, China has moved swiftly to fill the gap, said a senior Western diplomat who requested anonymity.

  Beijing in June gave Ashgabat a US$4 billion loan seen as an attempt to win the rights to Turkmenistan’s massive South Yolotan gas field, and it will soon unveil a 7,000km-long pipeline for Turkmen gas.

  “It’s easier for them to work with the CNPC [China National Petroleum Co, 中國石油天然氣] because to them, it’s China Inc. They get the technology, the funding, etc, all wrapped up in one package,” the diplomat said.

  “The way they operate, they control the actual production. The Chinese make it quite attractive to them, because they can add credits,” the envoy said.

  SOME GOOD NEWS

  But the news hasn’t been all bad for European energy firms this year, despite their inability to keep pace with Beijing.

  German firm RWE, a member of the Nabucco pipeline consortium, concluded an exploration and production deal in the Turkmen section of the Caspian earlier this year.

  The deal, struck in July at the height of the row between Russia and Turkmenistan, was widely seen as a signal from Ashgabat that it was considering throwing its weight behind the project.

  Although a spokeswoman for RWE declined to comment on the political significance of the deal, she said that the firm viewed the deal as a first step on gaining greater access to the isolated state’s energy riches.

  “What I’d suggest is to take it as a starting point for a long-term partnership. This is what we’re aiming for: a long-term, sustainable relationship with Turkmenistan,” spokeswoman Carolin Reese said.
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