Turkmen-Kazak Axis May Dictate Gas Prices
Turkmen-Kazak Axis May Dictate Gas Prices
An energy cooperation deal between Turkmenistan and Kazakstan could push up gas prices for all of their customers, with the notable exception of Russia, say NBCentralAsia analysts.
On September 12, Kazak president Nursultan Nazarbaev asked his Turkmen counterpart Gurbanguly Berdymuhammedov to join forces to “set a profitable price for energy resources”, suggesting that they establish a coordination council at ministerial level to improve energy cooperation.
Both countries are planning to increase gas production in coming years, and NBCentralAsia analysts have seen Nazarbaev’s proposal as an attempt to synchronise and increase the price they charge.
The Russian gas giant Gazprom is currently their main customer, buying Kazak gas at 145 US dollars per 1,000 cubic metres and Turkmen gas for 100 dollars. Gazprom sells gas to Europe at 25 dollar per 1,000 cu m. Iran also buys some Turkmen gas.
One NBCentralAsia economic analyst, who did not want to be named, said Gazprom and Iran would lose out from a Turkmen-Kazak pricing deal, and the effects would hit Europe and China later.
“This alliance will be able to influence the monopolistic pricing policy of its Russian partner more effectively, meaning that gas prices will begin to be shaped by market forces rather than geopolitics,” said the analyst.
However, Rovshan Ibrahimov, head of International Relations at Qafqaz University in Azerbaijan, does not agree that Kazakstan and Turkmenistan will start charging Russia more as long as its pipeline networks remain crucial to exporting their gas.
In May, Nazarbaev, Berdymuhammedov and Russian president Vladimir Putin signed an agreement to build a new Caspian gas pipeline from Turkmenistan to Russia through Kazakstan.
Political scientist Maksim Kaznacheev believes that the Kazak-Turkmen pricing policy is actually a ploy by Moscow to further its plans for an OPEC-style gas cartel, which it has been pushing for since 2002.
Political scientist Oleg Sidorov agrees with this view, and predicts that Russia will shortly join the embryonic Kazak-Turkmen price club.
“If Russia hadn’t already been consulted on this issue, then we would have seen a [hostile] reaction from the Kremlin by now,” he said.
Other analysts, however, say it is possible the tide could turn as high world demand for energy leaves both Kazakstan and Turkmenistan in a strong position to charge their customers more.
“Five or ten years ago, Gazprom could use pipelines as its main bargaining counter when negotiating with its Central Asian partners,” said one commentator. “Now the situation has changed. The Central Asians will use the fact that they have both gas and willing customers as their main argument when dealing with Gazprom.”
In June, President Gurbanguly Berdymuhammedov announced plans to diversify Turkmenistan’s energy exports via pipelines that are still at the planning stage – leading to China, Iran, India and Europe.
(NBCentralAsia draws comment and analysis from a broad range of political observers across the region.)
On September 12, Kazak president Nursultan Nazarbaev asked his Turkmen counterpart Gurbanguly Berdymuhammedov to join forces to “set a profitable price for energy resources”, suggesting that they establish a coordination council at ministerial level to improve energy cooperation.
Both countries are planning to increase gas production in coming years, and NBCentralAsia analysts have seen Nazarbaev’s proposal as an attempt to synchronise and increase the price they charge.
The Russian gas giant Gazprom is currently their main customer, buying Kazak gas at 145 US dollars per 1,000 cubic metres and Turkmen gas for 100 dollars. Gazprom sells gas to Europe at 25 dollar per 1,000 cu m. Iran also buys some Turkmen gas.
One NBCentralAsia economic analyst, who did not want to be named, said Gazprom and Iran would lose out from a Turkmen-Kazak pricing deal, and the effects would hit Europe and China later.
“This alliance will be able to influence the monopolistic pricing policy of its Russian partner more effectively, meaning that gas prices will begin to be shaped by market forces rather than geopolitics,” said the analyst.
However, Rovshan Ibrahimov, head of International Relations at Qafqaz University in Azerbaijan, does not agree that Kazakstan and Turkmenistan will start charging Russia more as long as its pipeline networks remain crucial to exporting their gas.
In May, Nazarbaev, Berdymuhammedov and Russian president Vladimir Putin signed an agreement to build a new Caspian gas pipeline from Turkmenistan to Russia through Kazakstan.
Political scientist Maksim Kaznacheev believes that the Kazak-Turkmen pricing policy is actually a ploy by Moscow to further its plans for an OPEC-style gas cartel, which it has been pushing for since 2002.
Political scientist Oleg Sidorov agrees with this view, and predicts that Russia will shortly join the embryonic Kazak-Turkmen price club.
“If Russia hadn’t already been consulted on this issue, then we would have seen a [hostile] reaction from the Kremlin by now,” he said.
Other analysts, however, say it is possible the tide could turn as high world demand for energy leaves both Kazakstan and Turkmenistan in a strong position to charge their customers more.
“Five or ten years ago, Gazprom could use pipelines as its main bargaining counter when negotiating with its Central Asian partners,” said one commentator. “Now the situation has changed. The Central Asians will use the fact that they have both gas and willing customers as their main argument when dealing with Gazprom.”
In June, President Gurbanguly Berdymuhammedov announced plans to diversify Turkmenistan’s energy exports via pipelines that are still at the planning stage – leading to China, Iran, India and Europe.
(NBCentralAsia draws comment and analysis from a broad range of political observers across the region.)
