THE EXPORT OF TURKMENISTANS ENERGY RESOURCES

Veniamin GINSBURG
Manuella TROSCHKE


Veniamin Ginsburg, Ph.D. (Technology), researcher at the Institute of Eastern Europe (Munich, Germany)

Manuella Troschke, D.Sc. (Econ.), researcher at the Institute of Eastern Europe (Munich, Germany)


The information vacuum around Turkmenistan has given rise to entirely contradictory opinions about this country, particularly with regard to the development of the national economy and its real possibilities. Official statistics testify to the intensive formation of market institutions and achievements in essentially all branches of the national economy. But according to the European Bank for Reconstruction and Development, as well as other international organizations, the republic has the lowest level of market relations among all the CIS states. The concepts of current and quite popular theories, on the other hand, have it that the countrys economic progress is closely related to the rates of development in its market relations.1 This is one of the reasons why several analysts doubt the reliability of the information furnished by Turkmenistans government structures, particularly regarding its high GDP growth rates (more than 20% annually).

But there is easily verifiable information that confirms positive shifts. In particular, in 2002 alone, export increased by 9%, despite the poor cotton harvest, this product being the countrys second most lucrative export commodity. In just the past three years, export increased 2.4-fold, and the foreign trade balance an index that is essentially very hard to meddle with was in the black and rising steadily. And this is not surprising since more than 80% of export currently consists of gas, oil, and petroleum products,2 the production of which is being intensively developed. Hydrocarbon resources and their refining products enjoy high demand, with respect to which the countrys economic prosperity at the current stage depends mainly on the supplies of these resources, the organization of their production and refining, their sales markets, and the availability of transportation routes.

As for the direct relation declared at the end of the 1980s beginning of the 1990s between the efficiency of the countrys economy and the development level in its market relations, the long practice of several states in the post-Soviet space gives reason to doubt the absolute reliability of this postulate and its universal applicability. The positive influence of the intensive development of market relations on economic growth rates is very ambiguous. In particular, the Central Asian countries and Belarus are looking at the very positive results of the active intervention of a strong state in the development of the main branches of the economy and its diversification.

In essentially every republic with a strong state power, there is much less likelihood of an economic slump caused by enterprises that used to be technologically related to other industries coming to a standstill. The negative consequences of the uncontrolled output of commodities inherent in the initial stages of forming market relations are compensated for by the stable planned operation of state and state-run enterprises. In order to acquire modern technology and develop industrial production to raise the efficiency of local raw material resources, all these countries have mobilized their own resources to the greatest extent possible and attracted large foreign investments. What is more, during the past few years, the governments of the republics that have agreed to shock therapy in order to intensify the market have been showing a distinct desire not only to correct the situation and increase their influence on the development of the national economy, but even to try and change the consequences of the reforms conducted to a certain extent. Vivid examples of this are the formation of the Kazmunaigaz state enterprise in Kazakhstan and the increase in the states support of Russias monopoly company, Gazprom.

In Turkmenistan, the influence of market structures on economic development is minimal. The state has reserved the monopoly right to ownership of raw material resources and large enterprises, and it strictly controls export, import, and currency transactions, and defines and carries out the priority trends in economic development.

Problems Are Forming Strategy

In the U.S.S.R., the Turkmenistan economy essentially played the role of raw material supplier. The republic produced 75-80 billion cubic meters of natural gas, 5-5.5 million tons of oil, approximately 400,000 tons of cotton fiber, 16,000 tons of raw wool, astrakhan fur, and raw material for the chemical and medical industries. Essentially all of these products went into the union holdings, whereby the hydrocarbon resources and cotton fiber produced up to 80-90% of the revenue. A small amount of gas and oil was refined and consumed in the republic, and about 4% of the cotton fiber was used to manufacture coarse fabrics. Most of the industrial enterprises not belonging to the fuel and energy complex specialized in the processing of agricultural products, and there was essentially no heavy machine building.

After the collapse in the Soviet Union, the republic encountered problems with gas sales, which constituted its main export article. The states contiguous to it Kazakhstan, Uzbekistan, and Iran have their own developed sources of hydrocarbons and do not need to purchase them in large amounts, the political situation in Afghanistan is extremely unstable, and Russia which holds a monopoly on gas transit in the region is offering $32-36 per 1,000 cubic meters with payment of up to 70% in barter and refuses to transport it to Western Europe. In so doing, Turkmenistan is well aware that Russia is selling its gas in Ukraine at $80 and in Western Europe at $110 per 1,000 cubic meters,3 while Turkey has to pay $133 for this gas, which is delivered to it within the framework of the Blue Stream project.4 The main consumers of blue fuel are the countries in the post-Soviet space, importers are not fulfilling their payment obligations, gas export is not bringing in the anticipated revenue, and the foreign trade balance is dipping into the red. What is more, between March 1997 and the beginning of 1999, there were essentially no gas deliveries to the CIS countries. As a result of this, the GDP dropped abruptly, and in 1998 the negative foreign trade balance exceeded $500 million. Despite the fact that Turkmenistan was still waiting for the settlement of more than 1 billion dollars in debt,5 it had to take out loans to maintain and develop its own economy, and its foreign debt, along with its negative foreign trade balance, amounted to more than two billion dollars.

In order to resolve the crisis, a program aimed at ensuring the countrys full economic independence was developed. Its top priority strategic tasks are developing alternatives to the northern routes for selling gas, expanding the range and production volume of industrial commodities from its own raw materials, making a corresponding change in the import and export structure, and placing the priority on the food sector of agriculture and the processing industry.

The Fuel and Energy Complex at the Present Stage

According to Turkmenistans official statistics, the countrys hydrocarbon resources are predicted at 23 trillion cubic meters of gas and 11 billion tons of oil, whereas independent experts estimate explored gas reserves to amount to 9-11 trillion cubic meters. The available production capacities are entirely sufficient to maintain gas production at a level of 60-70 billion cubic meters a year and if necessary they could be quite rapidly increased. According to official data, gas production in 2002 reached 53 billion cubic meters, 41 billion cubic meters of which were exported and 12 billion cubic meters used for the countrys own consumption. Oil production reached 9-10 million tons, and most of it is refined locally. The countrys main revenue, which determines its economic development, comes from the export of energy resources.

The Production and Export of Gas

In 2003, foreign gas deliveries are distributed in three directions: 36 billion cubic meters are being purchased by Ukraine (at $42 per 1,000 cubic meters), approximately 10 billion cubic meters goes at the same price to the Itera Company (for sale to CIS countries), and 8-10 billion cubic meters to Iran. Taking into account its own consumption, the country is producing on the order of 65-70 billion cubic meters of blue fuel, that is, the former level has essentially been reached. Deliveries to Ukraine, 250 billion cubic meters between 2002 and 2006, are regulated by an intergovernmental agreement of 2001.

Talks with Russias Gazprom on the purchase of Turkmen gas have been going on for several years. Gazprom last bought Turkmen gas in 2000, in the amount of 20 billion cubic meters. Since then, the sides have been unable to come to terms on the price. Gazprom believes that it should not be higher than $32-33 per 1,000 cubic meters, whereas Ashghabad insists on $44-45. At present, the situation with gas export to Russia has taken a definite turn for the better for the Turkmenistan side, and the prospects are largely regulated by an agreement between Russia and Turkmenistan on cooperation in the gas industry signed by the presidents of these countries on 10 April, 2003. This agreement is valid for 25 years with the right to extend it. According to this document, Russias Gazexport Company obtained the right to purchase from 5 to 6 billion cubic meters of gas in 2004, 6-7 billion in 2005, and 10 billion in 2006 at $44 per 1,000 cubic meters on Turkmenistans border with Uzbekistan and Kazakhstan. What is more, it stipulates that beginning in 2007, delivery volumes will significantly increase: 60-70 billion cubic meters in 2007, 63-73 billion in 2008, and 70-80 billion each year between 2009 and 2029.6 Until 2007, 50% will be paid in convertible currency, and the rest in deliveries of equipment and commodities. After that, payment will only be in currency, and the price formula will be formed in the same way as the price formulas in Gazexports European long-term contracts.7

In order to ensure such high growth rates in deliveries, repair and reconstruction of the current gas pipelines must be organized and new ones built. It is also possible that new fields will have to be developed. So the agreement is a comprehensive document that envisages, in particular, the following main aspects of cooperation:

  • surveying and developing fields, producing gas under the conditions of production sharing agreements on the shelf of the Caspian Sea, as well as its refining, transportation, and sale if the matter concerns joint projects;
  • joint planning, building, and reconstruction of gas industry infrastructure, including a system of main pipelines and the rendering of services;
  • drawing up and applying standardized normative and technical documentation that regulates the operation of main gas pipeline systems;
  • developing and introducing new technology, joint research and development;
  • optimizing blue fuel transportation routes in keeping with the legislation of the sides and on the basis of long-term agreements; creating new competitive gas transportation capacities and the necessary infrastructure.

The intergovernmental agreement is general in nature, and in the near future, specialists from the relevant departments are to make its provisions more specific. On the Turkmen side, these departments are the Turkmenneftegaz State Trade Corporation, and the Turkmengaz and Turkmenneft state concerns, with the Gazprom Open Joint-Stock Company representing the Russian side.

The very fact that this agreement was entered is extremely indicative. It shows that Russia has understood the error of its policy to put pressure on its former political and economic partners, as a result of which it lost much of its influence in Central Asia, and that now it is making an attempt to at least partially restore it.

The agreement is just as advantageous to Moscow as it is to Ashghabad. First, the proposed re-export of Turkmen gas will make it possible for Russia to ensure the fulfillment of its own contract obligations and make fuller use of the capacities of the gas pipelines8; second, it will give one of Russias main potential rivals on the European market less room to maneuver. Turkish analysts are justifying the reduction in purchase of Russian gas under the Blue Stream project with their desire to import hydrocarbons from Turkmenistan and Azerbaijan.9

The Ukrainian government was concerned with Russias high level and regulation of gas purchases, since it is in 2007the year after expiry of the Turkmen-Ukrainian agreement that the plans are to increase deliveries by 50-60 billion cubic meters, that is, by the amount required by Kiev for 2006. Ukraine might have to pay much more for Russian than for Turkmen gas, so the very next day after signing the above-mentioned Russian-Turkmen document, on 11 April, Ukrainian President Leonid Kuchma visited Turkmenistan and held talks with the countrys president, Saparmurad Niyazov. The official report on the results of their meeting notes (without details) that Turkmenistan intends to combine the interests of the Ukrainian gas market with the requirements of the Russian market. What is more, the sides discussed questions regarding joint implementation of a project for building a Caspian gas pipeline 1,700 km in length, with an annual capacity of 30 billion cubic meters and costing more than 1 billion dollars for increasing deliveries to Russia and Ukraine. This pipeline is to pass along the eastern coast of the Caspian Sea via Kazakhstan and will go into operation in 2007.

The Ukrainian side immediately stepped up its activity. According to Turkmen sources, the Neftegaz Ukrainy Joint-Stock Company plans on building a section of the gas pipeline (780 km in length) from the Kazakh-Turkmen border to the Beinau compressor station, and has already begun working on the design documents.10 Turkmenistan intends to build the part of the pipeline that runs through its territory, to the border with Kazakhstan, under its own steam. A final decision on all the construction questions, the percentage share of the sides, and the sources of financing was to be made at the Turkmen-Russian-Ukrainian summit during the 300th anniversary celebrations in St. Petersburg and then at the meeting in Yalta. But for various reasons talks on this topic did not take place, and the project is still up in the air. Turkmenistan and Ukraine are insisting on the expediency of building the other gas pipeline.11 Russias Gazprom, which essentially already has a monopoly on the transit of Turkmen gas to the north, is not interested in building this pipeline and maintains that reconstruction and expansion of the capacities of the existing lines will be cheaper. But if the sides decide to go ahead with this project, Gazprom also intends to participate in its implementation. Incidentally, the governments of the three countries discussed conditions for further developing existing and building new gas pipelines in order to ensure the high delivery rates of blue fuel envisaged by the project, and work has already begun in this direction. Ashghabad will foot the bill for work carried out in Turkmenistan as far as the border with Uzbekistan and Kazakhstan, and all work beyond this point will be financed by the partners.12

Gazprom, which has reliable support from the Russian government, went about its contract obligations with just as much gusto. At the beginning of August 2003, a meeting was held in Samarkand between the Russian and Uzbek presidents, where, first, a strategic agreement between these countries was finally approved and, second, Gazprom was officially given the status of transit operator for Turkmen gas in Uzbekistan.13

The agreement stipulates an increase in the export of Uzbek gas to Russia from 5 billion cubic meters in 2003 to 10 billion in 2010. What is more, the discussion begun on replacing a large amount of Turkmen gas with Uzbek in the future is essentially pointless, since the transit volumes are incompatible. In addition, Gazprom is becoming involved not only in the transit, but also in the production of Uzbek gas, having ousted Itera and LUKoil from this field.

In order to fulfill its obligations under the Russian-Turkmen agreement, Gazprom, after becoming project developer in Uzbekistan, intends to invest funds in raising the throughput capacity of the Central Asia-Center pipeline to 90 billion cubic meters, with respect to which it plans to participate in a tender to buy 44% of the shares of the Uzbektransgaz Company.

In light of the new agreements and redistribution of the spheres of influence, Itera has found itself in a difficult position. It managed to sign a three-year agreement with Turkmenistan (for 2004-2006) on the annual purchase on the Turkmen-Uzbek border of 10 billion cubic meters of blue fuel, but a problem arose with its transportation. Reports appeared in the press to the effect that Uzbekistan is not planning to enter a transit agreement with Itera next year. The Uzbekistan government recommended that Georgia, Armenia and Azerbaijan draw the relevant conclusions.14

In the meantime, Turkmenistan is expanding and reconstructing its gas transportation system, planning to increase export to 100 billion cubic meters by 2010. The bypass sections of the Turkmenistan (Derialyk)-Europe gas pipeline have already been built, major reconstruction of the Turkmenistan (Bekdash)-Europe section of the gas pipeline is going on, the Omak-Goturdepe gas pipeline and several compressor stations are being built, and several other sections of the gas pipeline network are being modernized.15 As a result, there are plans to raise the capacity of the Turkmenistan (Derialyk)-Europe gas pipeline to 90 billion cubic meters a year and of the Turkmenistan (Bekdash)-Europe to 20 billion cubic meters as early as 2004.

In this way, despite the dramatic improvement in economic relations with Russia and Ukraines regular settlement of its debts, Turkmenistans fuel and energy complex is developing in accordance with its original strategy. In particular, work is continuing in the Iranian and Afghan directions. Since 1997, Turkmen gas has been going to the northern border regions of Iran via the Korpedzhe-Kurt-Kui gas pipeline, which has a throughput capacity of 8 billion cubic meters a year. In 2000, a new route, Artyk-Lotfabad, was put into operation for making deliveries to the Iranian province of Khorasan. A total of approximately 6 billion cubic meters a year are pumped along this route, and there are plans to increase these deliveries to 12 billion cubic meters by 2012. The gas pipelines were built with the joint efforts of both countries. It should be noted that Iran is also exporting gas and recently completed the construction of a pipeline to Turkey. But there is room for an increase in demand in the western direction, and Turkmenistan is fully capable of joining it in order to jointly assimilate the European market. A feasibility report on the trans-Iranian gas pipeline was drawn up as early as 1998.16

In literally the past few months, another area for selling Turkmen gas has appeared. The coordinator of the European Union program, Armenias Gas Supply Security in Light of the Closing of the Metsamor Nuclear Power Plant, stated in Erevan that the most preferable way to resolve the problem of Armenias energy supply is to build a Turkmenistan-Iran-Armenia gas pipeline. According to the programs experts, in the next 20 years, the import of gas to Armenia will increase by almost 4-fold (from 1.5 billion cubic meters at present to 5.6 billion cubic meters), and if the nuclear power plant is closed, to 6.2 billion cubic meters. Of course, implementation of this project is rather long-term in nature, but the prospects for extending the geographical dimensions and volumes of gas export leave no reason for doubt.

Even more promising, according to the Turkmen leadership, is the Afghan vector. The Turkmenistan-Afghanistan-Pakistan (with its possible extension to India) gas pipeline project has been at the processing and coordination stage for several years now. The route is to pass through countries with an instable political situation, but the projects expediency and security are being justified by all the member states need for it. It is stipulated that Afghanistan and Pakistan will be able to buy Turkmen gas for their local needs and (under certain conditions) use the pipeline to transit their own gas. By the end of December 2002, the main problems envisioned by the project had been resolved and an agreement on construction signed by the heads of these three countries. The projected capacity of the pipeline is 30 billion cubic meters of gas a year, the total length is approximately 1,500 km, the cost is 2-2.5 billion dollars, and the main financial operator is the Asian Development Bank. Russias Stroitransgaz Company is also considering the possibility of participating in the laying of this route.17 Construction was to begin in 2003 and be completed in 2005, but not all the questions have been resolved and it has still not started.

Simultaneously, in Turkmenistan, the production and export of liquefied gas is burgeoning, from 111,200 tons in 2001 to already approximately 196,000 tons in 2002.18 The first installation with a projected raw material capacity of 1 billion cubic meters was assembled in 1998 on the Naiyp group of fields, and it produces 15,000 tons of liquefied gas and 15,000 tons of gas condensate annually. At present, the Canadian company, Thermo Design Engineering Ltd., is putting up another installation here with a capacity of 65,000 tons of liquefied gas and 65,000 tons of condensate a year.19 Two more installations are located in the city of Turkmenbashi. The first, which has a capacity of 10,000 tons a year, operates independently, and the second, with a capacity of 220,000 tons and plans to increase it to 345,000 tons, is part of an oil refinery complex. Liquefied gas is mainly delivered to Iran and Afghanistan.

Oil and the Diversification of its Refining

An increasingly important factor in the republics economic development is the expansion of oil production and refining. In 2001, on the order of 8.2 million tons of oil was produced, in 2002, approximately 9 million tons, and in 2003 11 million tons were planned.20 Foreign investors are being invited to survey and develop the countrys new fields with reimbursement their funds by means of a percentage of the obtained product. At present, five production sharing agreements have been entered, and the annual investments of overseas companies exceed 170 million dollars, particularly in surveying work, which is already being conducted under the Unit-1 and Units-11, 12 projects.

Table

Investment and Oil Production Volumes by Foreign Companies (according to official statistics)21

Company

Project name

Investments in 2002, in mill. dollars

Investments in 2003, in mill. dollars (anticipated)

Production in 2002, thou tons

Production in 2003, thou tons (anticipated)

Burren Energy

Nebitdag

16.00

24.00

492

590

Hazar Consortium

Hazar

55.00

39.00

307

400

Dragon Oil

Cheleken

56.00

60.00

500

550

Petronas

Unit-1

47.00

40.00

Maersk Oil

Units-11,12

10

Total

 

174.00

173.00

1,299

1,540

There are plans to involve new investors in the near future in surveying and developing fields on the Caspian Shelf. Talks are already drawing to a close on forming a consortium with the participation of Iranian and Russian enterprises to develop three oil-bearing units on the former Soviet-Iranian border. The Zarit Closed Joint-Stock Company founded by state enterprises Zarubezhneft (26%) and Rosneft (37%), along with the Itera Company (37%), is the representative for the Russian side. It is anticipated that Irans participation in this project will also help to achieve a five-way compromise on the status of the Caspian.22

The problem of sales arises when production increases. Essentially all the oil was previously refined and most of its refining products used for the countrys own needs. There are two oil-refining plants in the republic, the production capacities of which essentially make it possible to refine all the oil produced at present. The Turkmenbashi plant (with a capacity of up to 6 million tons of oil) is located directly on the Caspian coast. What is more, it is currently being reconstructed, and in the next few years there are plans to increase its production to 9 million tons. The Seidi plant (in Chardzhou) with a capacity of approximately 6 million tons was built on the eastern border with Uzbekistan during Soviet times for refining Tiumen oil. Due to aggravated relations with Russia, deliveries to this plant were stopped. There are no large oil fields in the east of Turkmenistan, and delivery from the Caspian area by land significantly hikes the cost of the product, so for a long time now the Seidi plant has been operating at a very low capacity.

In order to pump Siberian oil to the oil refineries of Kazakhstan and Turkmenistan, the Omsk-Pavlodar-Chimkent-Chardzhou oil pipeline was built. Its throughput capacity at the beginning of the line is 29.4 million tons a year, and in the Chimkent-Chardzhou section (it was frozen in 1999), 7 million tons. At present, Russia and Kazakhstan are drawing up a project for restoring this pipeline with a further increase in its capacity and its extension through Turkmenistan for exporting oil to the northern regions of Iran and Afghanistan. In so doing, there are also plans to supply the Seidi plant with oil, which is to go back into full operation.

In keeping with this strategy, the oil-refining industry is being developedthe volumes and deep refining of raw materials are being intensively increased, the product range is being expanded, and the volumes and quality of production raised. In the past few years, investments in reconstruction of the Turkmenbashi oil refinery amounted to approximately 1.5 billion dollars. Several facilities have already gone into operation: a modern catalytic reforming installation for producing 750,000 tons of high-octane gasoline; a production line for the annual refining of about 1.8 million tons of oil with the output of up to 950,000 tons of gasoline, 255,000 tons of diesel fuel, 280,000 tons of heating fuel, and 345,000 tons of liquefied gas, which is used as raw material at the plant in the same complex for producing granulated polypropylene with a capacity of 90,000 tons a year. The complex also includes a plant for producing lubricating oil, 80,000 tons a year,23 and in future there are plans to expand the capacity even more, which will make it possible to increase the output of polypropylene to 300,000 tons a year.

Large-scale reconstruction is also planned at the Seidi plant. The cost of this work amounts to approximately 1.5 billion dollars, and the project developer is Israels Merhav Group.24

According to local sources, the main creditor of the projects is a consortium of German banks, Deutsche Bank AG and DG BankDeutsche Genossenschaftsbank und Kredit Anstalt für Wideraufbau. The contract for annual deliveries of 70,000 tons of polypropylene was entered with Japans Itochu Company.

Export of Electric Power

In the 1970s, in the town of Mary, not far from the Shatlyk gas field, a large power plant was built with a capacity of about 1,000 MW, which was much higher than the republics domestic demand. At first, it was intended for exporting electric power to Iran, but the change of regime in this country led to a cooling in Soviet-Iranian relations and the project was shelved. The power plant was used to provide for the countrys own needs, and the excess energy went into the Central Asian ring power system. What is more, power stations operated in the republic in Krasnovodsk (now Turkmenbashi), Bezmein, and Balkanabad, as well as several local plants of much lower capacity. After the collapse in the Soviet Union, electric power export was drastically reduced, as a result of which its production also dropped, from 15 billion KW/h in 1991 to 10-10.5 billion KW/h in 2002.

In the past few years, the country has been intensively boosting its export. Essentially all the large power plants have been reconstructed and the existing apparatus modernized or new equipment installed. According to local official sources, the capacity of the Mary plant alone now amounts to more than 1,600 MW.

Turkmenistan has already entered several contracts on export deliveries of electric power, and is also working on new prospects in this branch. In particular, a contract has been signed with Tajikistan on the seasonal supply of electric power to an aluminum plant, for the time being from the fall of 2002 until May 2003. (One point two billion KW/h at 1.2 cents per KW/h have been delivered to the border with Uzbekistan,25 the contract amounts to 14.4 million dollars, with 60% of the payment in currency and 40% in aluminum products and equipment for the development of the power systems.)

Since the summer of 2002, electricity has been supplied to Iran via the Balkanabad Ali-Abad transmission line, which is 270 km in length. And on 4 September, 2003, the presidents of the two countries signed a memorandum on long-term cooperation in electric power between Turkmenistan and Iran.26 In particular, there are plans to build high-voltage transmission lines and substations, which should connect the energy systems of both states and stabilize the export of electric power. In the near future, there are plans to deliver 520 million KW/h via the Balkanabad-Gonbad transmission line, 375 million KW/h via the Serakhs (Turkmenistan)-Serakhs (Iran), and approximately 1.5 billion KW/h a year at 2 cents per KW/h via the Mary-Mashad. The total annual revenue from the export of electric power to Iran amount to approximately 48 million dollars. Half of these funds will be paid in currency and the rest in goods and services.

As official Ashghabad believes, the export of electric power to the northern provinces of Afghanistan is also promising. According to local sources, the construction of two transmission power lines has already begun: the Mary-Bazargan-Mazar-i-Sharif (with a proposed extension to Kabul) and the Mary-Heart-Kandahar, and an Imam Nazar-Andkhui-Khodjadukki-Shibarghan route is being developed.

In order to carry out these tasks, there are plans to build new and reconstruct essentially all of the major existing power plants. In June 2003, an agreement with General Electric and the Turkish company, Chalyk Energy Sanaiy ve Tijaret, was signed on cooperation in implementing a General Development Plan for the Production of Electric Energy in Turkmenistan. There are hopes to increase the capacity of the Mary power plant from 1,685 to 2,051 MW, of the Turkmenbashi heat and electric power plant from 590 to 713 MW, and of the Abadan, Seidi, and Balkanobad power plants, and there are plans to build two new power plants in Ashghabad and Dashkhovuz by 2011. The total capacity of the countrys power plants should increase from 3,106 to 4,654 MW by 2011. The total amount of intended investments amounts to approximately 600 million dollars.27

* * *

So, after a rather long period of stagnation, export of the republics heat and energy complex production is being stepped up. The market has designated an elevated demand, and the country has set its sights high. The agreements entered are placing quite a number of obligations on the country. The program for developing production and transporting energy resources envisages increasing oil production to 48 million tons, and gas production to 120 billion cubic meters. In order to carry out these tasks, there are plans to invest approximately 10.5 billion dollars, whereby approximately 90% of this amount should be direct foreign investments.28 The plans for producing, processing, and exporting gas seem extremely realistic. Time will tell just to what extent the oil plans are justified, since the country is counting on developing the supplies on the Caspian shelf. It remains to be hoped that the coastal states will successfully complete sharing the seas hydrocarbon resources.


The work was carried out within the framework of a scientific research project called Zwischen Russland und China: Reformmodelle und Governance in Zentralasien, financed by the Volkswagenstiftung.

1 See: Liberalisierung, Stabilisierung und Wachstum, Weltentwicklungsbericht, Weltbank, 1996; S. Fischer, R. Sahay, A. Vegh Carlos, Stabilization and Growth in Transition Economies: The Early Experience, Journal of Economic Perspectives, Vol. 10, No. 2, Spring 1996.
2 See: Vneshnetorgoviy oborot Turkmenii v ianvare-iiule sostavil 3 mlrd 354 mln doll., Internet newspaper Turkmenistan.ru, 22 September, 2003 [http://www.turkmenistan.ru].
3 See: Neft i gas na postsovetskom prostranstve: iabloko razdora ili mekhanizm sotrudnichestva? Materikthe information analytical gate to the post-Soviet space. Short-hand record of a television program on TVTs, 31 October, 2002.
4 See: Nam ne nuzhen rossiiskii Goluboi potok utverzhdaet turetskii analitik, Media Press (Baku), 30 July, 2003 [http://www.mediapress.media-az.com].
5 See: Leonid Kuchma lichno kontroliruet voprosy svoevremennoi oplaty postavok Turkmenskogo gaza, Turkmenistan.ru, 30 June, 2001; Saparmurad Niyazov proinformiroval o vneshnem dolge, Turkmenistan.ru, 10 May, 2001.
6 Soglashenie mezhdu Rossiei i Turkmenistanom o sotrudnichestve v gazovoi otrasli ot 10 aprelia 2003 goda, Turkmenistan.ru, 11 April, 2003.
7 See: Ia. Pappe, Kontrakt s Turkmenistanom obespechil Rossii nadezhniy gazoviy tyl, Politburo, No. 18, 2003.
8 See: A. Cohen, Kaspii na poroge buma i rosta dobychi energonositelei, EurasiaNet, 25 March, 2003 [http://www.eurasianet.org]; Ia. Pappe, op. cit.
9 See: Nam ne nuzhen rossiiskii Goluboi potok utverzhdaet turetskii analitik.
10 See: Ukraina pristupila k razrabotke TEO odnogo iz uchastkov prikaspiiskogo gazoprovoda, Turkmenistan.ru, 17 April, 2003 [http://www.turkmenistan.ru].
11 See: Turkmenistan predlagaet Rossii i Ukraine postroit noviy gazoprovod vdol Kaspiiskogo moria, RIA Novosti, 11 July, 2003.
12 See: I. Soloviev, Turkmenistan i Gazprom perevodiat soglashenie o sotrudnichestve v prakticheskuiu ploskost, Turkmenistan.ru, 25 July, 2003 [http://www.turkmenistan.ru].
13 See: A. Nikolskiy, O. Deriagina, Gazprom poluchil svoe, Vedomosti, 7 August, 2003.
14 See: I. Popov, Iteru sdelali lishnei, Finansovye Izvestia, 19 September, 2003.
15 See: E. Kasparov, Neftegazovaia infrastruktura: vykhod na mirovye rynki [http://www.turkmenistan.gov.tm], 29 July, 2003.
16 See: S. Kamenev, Turkmenistan: Energy Policy and Energy Projects, Central Asia and the Caucasus, No. 4 (22), 2003.
17 See: Stroitransgaz nameren priniat uchastie v tendere na stroitelstvo nefteprovoda Zapadniy Kazakhstan-Kitai, AEI PRAIM-TASS, 29 April, 2003.
18 See: E. Kasparov, Ne tolko v trubu, Turkmenistan.ru, 6 May, 2003 [http://www.turkmenistan.ru].
19 See: Turkmenbashi posetil zavod po proizvodstvu szhizhennogo gaza v Naiype, Turkmenistan.ru, 14 May, 2003 [http://www.turkmenistan, ru].
20 See: 173 mln doll. investiruiut v tekushchem godu zarubezhnye operatory neftedobychi v Turkmenistane, Turkmenistan.ru, 4 April, 2003 [http://www.turkmenistan.ru].
21 See: Na usloviiakh soglashenii o razdele produktsii v Turkmenii realizuetsia piat proektov, Turkmenistan.ru, 7 April, 2003 [http://www.turkmenistan.ru].
22 See: Morskoi treugolnik, Turkmenistan.ru, 26 March, 2003 [http://www.turkmenistan.ru].
23 See: V. Sergeev, V gorode Turkmenbashi sozdan krupniy neftekhimicheskii kompleks, Turkmenistan.ru, 15 October, 2001 [http://www.turkmenistan.ru].
24 See: Noviy superproekt Niyazova, Turkmenistan.ru, 19 September, 2003 [http://www.turkmenistan.ru].
25 See: Iran s 1 iiunia budet importirovat elektroenergiiu iz Turkmenistana, Turkmenistan.ru, 16 May, 2003 [http://www.turkmenistan.ru].
26 See: Turkmeno-Iranskii energomost, Turkmenistan.ru, 22 September, 2003 [http://www.turkmenistan.ru].
27 See: General Electric stal dolgosrochnym partnerom Turkmenii v razvitii elektroenergetiki, Turkmenistan.ru, 7 June, 2003 [http://www.turkmenistan.ru].
28 See: E. Kasparov, Flagman ekonomiki Turkmenistana [http://www.turkmenistan.gov.tm./ekonom/ek_oil/280603.htm], 28 June, 2003.

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