Ashgabat Unimpressed By Moscow’s Objections On Trans-Caspian Pipeline

The updated estimates of Turkmenistan’s vast gas reserves (see EDM, October 20) and the European Commission’s support for a trans-Caspian pipeline to Europe are unwelcome by Moscow. On October 14, President Dmitry Medvedev chaired a special meeting of Russia’s Security Council on Russia-EU relations in the energy sphere. The meeting considered ways to resist the European Union’s Third Energy Package as well as the EU’s Nabucco and trans-Caspian gas pipeline projects. Energy Minister Sergei Shmatko and Gazprom CEO Aleksey Miller were tasked to draft proposals in this regard. Introducing the meeting in front of the media (before going into closed session), Medvedev reaffirmed the familiar position that trans-Caspian pipelines may not be built without the consent of all five Caspian riparian countries. He cited Moscow’s usual legal and ecological objections to trans-Caspian pipelines (Interfax, October 14).

In an accompanying move, Russia’s Foreign Affairs Ministry has circulated a document detailing the Russian government’s legal and ecological objections to a trans-Caspian pipeline for Turkmen gas (Interfax, October 15).

During the Security Council meeting, Medvedev also urged Caspian countries (meaning in this case Turkmenistan and Azerbaijan) to “respect all of the previously signed agreements” on the Caspian Sea’s status. Such agreements, in Russia’s view, preclude bilateral coast-to-coast pipelines without the five countries’ consent, or pending a unanimously agreed re-definition of the Caspian Sea’s status. Medvedev’s thesis is misleading, however. There are no such “previously signed agreements,” apart from the 1921 Soviet Russia-Iran and 1940 USSR-Iran agreements on the Caspian Sea, whose post-1991 validity is dubious, and which, in any case, do not deal with energy-related issues.

Conversely, Azerbaijan (since the late 1990s) and Turkmenistan (particularly since 2010) take the position that coast-to-coast pipeline projects are a bilateral matter for the countries involved. After Azerbaijan had pioneered that view, Kazakhstan rallied to it during the late 1990s and in subsequent years (albeit growing more cautious recently). During the summit of Caspian countries’ heads of state in Baku in November 2010, Turkmen President Gurbanguly Berdimuhammedov publicly contradicted Medvedev’s thesis about five-party consent to bilateral projects.

Meanwhile, the EU has joined that debate on Turkmenistan’s and Azerbaijan’s side. This recent change can be seen clearly from Ashgabat’s confident response to the Kremlin’s warnings. On October 18, Turkmenistan’s Foreign Affairs Ministry expressed its “bewilderment at Russian official structures’ [sic] attitude toward Turkmenistan’s advancing cooperation with the European Union, a normal cooperation between equal partners on the energy markets… The trans-Caspian pipeline project answers to the needs of the country’s economic development. Energy exports to Europe and the trans-Caspian project in this context [are] of key importance. This cooperation with our European partners will continue” (Turkmenistan State News Service, October 18; Interfax, October 19).

President Berdimuhammedov reaffirmed this position on October 14 when receiving Austrian President, Heinz Fischer, in Ashgabat. With reference to the Nabucco project (which is bound for Austria), Berdimuhammedov stated that Turkmenistan counts on a trans-Caspian pipeline for accessing the vast European gas market (Turkmenistan State News Service, October 14).

Since September 12, the European Commission holds the EU’s collective mandate for negotiating a framework agreement with Turkmenistan and Azerbaijan on trans-Caspian gas pipelines, to be linked with the Southern Corridor to Europe. Tripartite working groups (EU-Azerbaijan-Turkmenistan) at the political and expert levels are scheduled to conduct the negotiations. The European Commission has also proposed to Kazakhstan to join this project (Trend, October 13).

On October 19, the European Commission announced a long-awaited initiative to finance infrastructure projects from EU funds and bonds. This 50 billion euro initiative, historically unprecedented, is conceived both as an energy security measure and as an anti-crisis measure. Within this wider framework, 9 billion euros in “project bonds” are to be earmarked directly for priority projects in trans-European infrastructure, such as gas pipelines, from 2014 onward. The project bonds funding would support the European Commission’s “Connecting Europe Facility,” in which the Southern Gas Corridor is a high priority. The bonds are expected to generate a multiplier effect, helping project companies (such as Nabucco and a prospective trans-Caspian project company) to attract further funding on capital markets. Moreover, the Commission will ask the European Parliament to approve funding from the EU’s budget. Representatives of the European Parliament’s largest groups, Christian-Democrats and Social Democrats, have welcomed these twin initiatives (EurActiv, October 19, 20; European Commission press releases, “Connecting Europe” and “Project Bond Initiative,” October 19, 20).

While the Commission refers broadly to the Southern Corridor, it clearly means Nabucco linked with a trans-Caspian pipeline. Nabucco’s two small rival pipelines in the Southern Corridor lack the capacity for transporting Turkmen gas. The Commission’s hands-on commitment to a trans-Caspian pipeline encourages Turkmenistan to go ahead with this project and should also encourage Kazakhstan to join it.