Publication: Monitor Volume: 4 Issue: 18

Pakistan’s Oil and Gas Ministry announced yesterday that the U.S. company UNOCAL and the Taliban authorities of Afghanistan are finalizing an agreement to lay a gas export pipeline from Turkmenistan via Afghanistan and Pakistan to the Indian Ocean. UNOCAL leads a consortium that also includes the government of Turkmenistan, Delta of Saudi Arabia, Crescent Group of Pakistan, Itochu of Japan, Hyundai of South Korea and Inpex of Indonesia. Russia’s Gazprom has been offered a minor stake in the project. Construction of the 1,300-kilometer-long, $2 billion pipeline is now expected to begin this year. (Western agencies, January 27) This large-capacity pipeline should break the existing Russian stranglehold on Turkmen gas exports. A pipeline from Turkmenistan to Iran, inaugurated on December 30, with an annual capacity of only four billion cubic meters, made a first, if slight, dent in that stranglehold. A large-capacity pipeline from Turkmenistan via Iran to Turkey is under consideration.

Ranked second in the world in gas reserves, Turkmenistan remains, in the near term, basically dependent on Russia for access to consumers. Ashgabat’s latest negotiations with Moscow dramatized that dependency. Possible transit of Turkmen gas through Russia to European consumers has been discussed a number of times recently: on January 14-15, by Russian prime minister Viktor Chernomyrdin and Gazprom chairman Rem Vyakhirev with Turkmen president Saparmurad Niazov in Ashgabat; and in a follow-up round on January 23-24, by Gazprom management with Turkmen deputy prime minister Batyr Sarzhayev in Moscow. Both rounds failed. The Russian side argued that it has no pipeline capacity available for transiting Turkmen gas to Central and Western Europe. Instead, Moscow invited Turkmenistan to invest in Russia’s Yamal-Europe pipeline project in return for a transit quota after the pipeline is completed. Turkmenistan, however, has neither the investment funds nor the desire to prolong its dependence on Russia for transit.

The two rounds focused on conditions for Russian transit of Turkmen gas to Ukraine. The Russian side insisted on purchasing the Turkmen gas and reselling it to Ukraine, instead of simply transiting it. It offered a price of $28 to $32 per thousand cubic meters — below production costs — and payment 70 percent in barter. Turkmenistan asked for a realistic price of $42 per thousand cubic meters. Since early 1997, Russia has closed its pipeline system to Turkmen gas bound for Ukraine and other CIS countries. This issue, as well as that of Ukrainian payments, will top the agenda of Ukrainian president Leonid Kuchma’s impending visit to Turkmenistan. (Russian agencies, January 24-27)

Parliament Rejects Bill on Akmola’s Status.