RUSSIA AND IRAN: ATTEMPTS TO IMPLEMENT NEW STRATEGIC STEPS IN THE CASPIAN-CENTRAL ASIAN OIL AND GAS INDUSTRY

Rustam MAKHMUDOV


Rustam Makhmudov, Independent researcher (Tashkent, Uzbekistan)


The events of 2008 on the Caspian Basin and Central Asian natural gas and oil market clearly show that the key regional and world geopolitical players are looking for new ways to take the strategic initiative in the rivalry for access to the production, transportation, and purchase of crude oil and gas. Russia and Iran in particular have made several original proposals and taken specific measures aimed at raising competition in the regions energy sector to an essentially higher level. It is worth taking a closer look at this.

Russias Price Games on Central Asias Gas Market

By the end of last year, the situation on the Central Asian natural gas market was developing quite dynamically. This was prompted by the appointment of a new president, G. Berdymukhammedov, in Ashghabad, who immediately demonstrated his desire to draw Turkmenistan out of its foreign policy lethargy. A traditional tool of national policy has been to stimulate contacts with foreign players regarding the laying of major pipelines in every possible direction and the sale of raw gas. In particular, Ashghabad initiated numerous ties with European and American diplomats with respect to the implementation of the pro-Western Trans-Caspian gas pipeline. G. Berdymukhammedov also confirmed the agreement between Beijing and former president Niyazov on the laying of the Turkmenistan-China route.

This of course aroused Moscows concern since it boded a significant weakening of its dominant position in the transit and purchase of natural gas from Turkmenistan. The Kremlin immediately took a preventive step against the Trans-Caspian route. In May 2007, Russia decided it was time to reconsider the agreement draft on building the Trans-Caspian gas pipeline, which was signed in December of the same year. This route was designed to pump 20 bcm of gas a year and is scheduled to go into operation no later than 2010.

This project was called upon to demonstrate the West Russias firm resolve to retain its dominant position in the region and its serious intentions to be included in any competition over the Turkmen gas fields on the Caspian shelf.

But Moscow was faced with the more serious problem of raising the price for the purchase of Turkmen natural gas. China initiated the price increase. According to some data, Beijing suggested that it purchase Turkmen gas for 195 dollars per 1 thousand cubic meters, which made the PRC a more attractive buyer than Russia. For Moscow, the appearance of a powerful solvent rival with a vast growth potential on the internal blue fuel consumption market not only threatened the 25-year agreement between Gazprom and Turkmenistan, but also opened up the prospect of a dramatic increase in Chinas geopolitical influence in Central Asia in the future. So Russias and Gazproms main strategic goal in 2008 was to


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