Posted on 12/22/2006 11:03:38 AM PST by gleeaikin
For anyone attempting to secure supplies from Turkmenistan's abundant energy reserves there was one man to deal with: Saparmurat Niyazov. The Turkmen leader last year took personal control of the state oil and gas industry after sacking top managers for alleged embezzlement. He took on management functions himself, and signed contracts personally, often for more than the republic could actually supply. "Virtually nothing in oil and gas trading could be done without Mr. Niyazov's authority," says Michael Dennison, lecturer in former Soviet Union politics at the University of Leeds.
His death at best leaves a vacuum at the top of a dysfunctional institutional structure controlling the world's fifth biggest gas reserves. At worst, it could lead to political instability that could threaten Turkmenistan's gas supply via Russia to its main European customer, Ukraine--with potential knock-on effects for the rest of Europe. Though few Europeans realise it, the isolated central Asian republic plays a crucial role in the continent's energy security. Gazprom, the Russian natural gas monoply, relies increasingly on cheap central Asian supplies to met demand from domestic and international customers, which include supplying more than a quarter of Europe's gas.
The Russian giant briefly cut of gas to Ukraine in a pricing dispute last January--causing deliveries in a transit pipeline across Ukraine to western Europe to fall. The face-saving compromise that resolved the dispute saw most of the supplies Gazprom buys cheaply from Turkmenistan channelled into meeting Ukraine's needs--via a Swiss-registered intermediary called RosUkrEnergo. That enabled Gazprom to charge a lower price than initially demanded of Kiev.
Deutsche UFG, a Moscow investment bank, warned yesterday that losing Turkmen gas, even briefly, would send Gazprom scurrying to find extra supplies, and risk its not having enough for all customers. It could also reopen the pricing dispute with Ukraine, which this autumn agreed another 40 percent increase from next year, again based on Turkmen gas. [lack of clarity in the original article]
A spokesman for Naftogaz Ukrainy, the Ukrainian state oil and gas company, expressed hope that supplies would not be disrupted, but admitted Mr. Niyazov's unexpected death created many uncertainties. "Very few people can tell you what the situation is in the Turkmen capital, Ashgabad, at the moment," he said. Barring a severe breakdown, however, analysts said the threat to the Turkmen supplies was distant. Turkmenistan is so dependent on revenues from energy exports, whoever comes to power is likely to keep gas flowing.
"Turkmenistan has every incentive to honour its agreements," said Jonathan Stern, a gas expert at the Oxford Institute for Energy Studies. "There is the possibility [of disruption] but I think it would have to be a result of people massing on the streets and a breakdown of civil order." In such a situation, prolonged instability or damage to the development of the Turkmen energy industry could create longer-term problems for Gazprom. It hoped to raise Turkmen imports from 40bn (billion) cubic meters (bcm) this year to 60bcm-70bcm in 2007 and 70bcm-80bcm from 2009.
Depending on what regime comes to power, Gazprom may also face more competition for Turkmen gas from customers such as China. Mr. Niyazov had already raised alarm at Gazprom by planning to finalise by the year-end a 30bcm-a-year export contract to China, though his death casts uncertainty over that.
An announcement by Mr. Niyazov last month that 7,000bn cubic meters of gas had been discovered at Turmenistan's Iolantan field--making it one of the world's biggest deposits--met widespread disbelief.
I forgot to add that there was: Additional reporting by Roman Olearchyk in Kiev, and Arkady Ostrovsky and Isabel Gorst in Moscow.
The new regime can start by tearing down the golden statue of the Great Leader.
Then if they can restore civil liberties in Turkmenistan up to the level enjoyed by the Kazakhs or the Kyrgyz, maybe there will be progress.
Or will it be North Korea all over again (not a whole lot of difference between Niyazov and Kim Jong-mentally-Il)?
I will soon be posting "Turkmenbashi aura casta a dark shadow" which describes Niyazov's cruelty and eccentricity. I don't know enough about him to know if he was a nasty, greedy dictator, or a total nut job like in N Korea, Cambodia, and Uganda.
Unrelated article
Turkmen leader sacks "quiet" defence minister in latest shake-up
ASHGABAT (AFP) Sep 30, 2003 Turkmenistan President Saparmurat Niyazov has sacked his defence minister four months into the job for being too "quiet" and not enjoying his work, Turkmen state media reported Tuesday.
Redzhepbai Arazov, the first civilian to head the ministry, was relieved of his post as it was "not his profession and he is a quiet man who does not enjoy very good health," Niyazov was reported as saying on Turkmen television.
Link: http://www.spacewar.com/2003/030930113846.a62ajt8a.html
Niyazov banned all public playing of music.
Said that statues of himself appeared overnight like magic without government help.
Total nut job. Islam Karimov preferable anytime.
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