Turkmenistan increases economic and energy cooperation with Russia

A meeting between the Russian President Vladimir Putin and the Turkmen President Gurbanguly Berdimuhamedov (Credits: Kremlin.ru, CC BY 4.0, via Wikimedia Commons)

Geopolitical Report 2785-2598 Volume 12 Issue 11
Author: Silvia Boltuc

Turkmenistan seeks regional and international partners to strengthen the national economic performance and attract investors in infrastructural projects. Recent meetings between Turkmen and Russian official representatives and companies underline the Kremlin’s strategy to increase its presence in the country and Ashgabat’s necessity to diversify its commercial partners.

The Chambers of Commerce and Industry of Turkmenistan and the Russian Federation held the eighth joint economic forum on October 20th, 2021. Within the framework of the event, the emphasis was placed on the Turkmen-Russian investment and production projects. The parties paid particular attention to the prospects for interaction in the industrial, construction, textile, agricultural, logistics, tourism industries, and digital technologies.

The forum was attended by officials, representatives of banking and financial structures, employees of large companies. The Turkmen side noted that one of the priority vectors of the foreign policy of the Central Asian country is a partnership with the regions and large industrial centres of Russia.

Business people from both countries demonstrated their export capabilities through presentations and pointed out their import needs. Special attention was paid to the potential of the Commodity and Raw Materials Exchange of Turkmenistan. Part of the forum was devoted to the possibilities of the International Seaport of Turkmenbashi. The congress participants noted that this facility could be used as a logistics hub in the Caspian region. The emphasis was also placed on the prospects for investment in the construction of ships.

On October 19th, 2021, Ashgabat hosted a meeting between President of Turkmenistan Gurbanguly Berdimuhamedov and the head of PJSC Lukoil Vagit Alekperov. The parties discussed issues of further interaction with a focus on the fuel and energy complex. According to Alekperov, Russian business people, particularly the oil company Lukoil, are ready to take all necessary measures to develop mutually beneficial cooperation with the Turkmen authorities. Berdimuhamedov and the head of the company exchanged views on the radical modernisation of the oil and gas industry of Turkmenistan, diversification of routes for the export of relevant energy resources to the world market.

Geopolitical scenario

Turkmenistan needs to increase its oil & natural gas exports to support the national socio-economic development. The recent Memorandum of Understanding between Ashgabat and Baku on joint exploration, exploration, and development of the Dostluk field stressed Turkmenistan attempt of establishing a connection with the Caucasus region and energy market and diversify its oil export.  At the beginning of 2021, the Russian oil company Lukoil expressed the plan to become an operator of the Dostluk oil field.

Undeniably, Turkmenistan has a strategic value in the Eurasian energy market because the country is rich in oil and natural gas reserves. According to official figures, Turkmenistan’s resource base is approximately 71.64 billion tons of oil equivalent, including 53 billion tons in onshore fields and 18.21 billion tons in the Caspian Sea. In 2016 the Oil and Gas Journal declared Turkmenistan the sixth largest natural gas reserve holder globally and estimated an amount of 265 trillion cubic feet (Tcf) of proven natural gas reserve.

Russia has considered Turkmenistan as a strategic asset in Central Asia since the collapse of the Soviet Union. The Kremlin considers Central Asia part of its blizhnee zarubezhe (near abroad), the lebensraum (vital space) where the Russian Federation aims at expanding its influence and presence to strengthen its position in Eurasia and counter other regional and international players such as China, Turkey, the United States and also Iran.

Since the ’90s, the European Union has tried to create a dialogue with Turkmenistan and has expressed its interest in the Turkmen oil and natural gas reserves. Media and international sources and Turkmen and European official representatives have intermittently promoted the Transcaspian Gas Pipeline project (TCP), whose purpose was to transport natural gas from Turkmenistan and Kazakhstan to European Union member countries circumventing both Russia and Iran. Although the project has been an ‘interesting idea’ for years, the close relations between Azerbaijan and Turkmenistan and the possibility that both Baku and Ashgabat expressed to work in the energy field jointly might give a decisive impulse to the TCP. Bruxelles positively sees the TCP because this gas pipeline might diversify the EU gas import and decrease the European dependence on Russia. On the other hand, the Russian Federation and Iran have always obstructed the realisation of the TCP because it can reduce Russian revenues and role in the Eurasian energy market.

Regarding the natural gas pipeline project, we should mention the Turkmenistan-Afghanistan-Pakistan-India pipeline (TAPI) considered relevant in Asghbat’s foreign and economic strategy (Gasdotto TAPI tra speranze future e interessi geopolitici). Unfortunately, the U.S. troops withdrawal from Afghanistan and the establishment of the Taliban interim Government have alarmed Turkmenistan because Ashgabat needs a stable and secure Central Asia to promote its foreign policy based on commercial trade and energy exports. TAPI is among those regional projects affected by the Afghan crisis because it needs a stable Afghanistan to be realised and implemented (The new geopolitical game of Afghanistan).

Conclusion

Turkmenistan has always tried to balance its foreign policy between the West and the Russian Federation. On the one hand, Ashgabat aims at becoming one of the major Brussels energy partners exploiting the Azerbaijani territory and the natural gas pipelines that cross the Caucasus, Turkey, and arrive in Europe (i.e. Trans Anatolian Natural Gas Pipeline and Trans Adriatic Pipeline). The European Union is looking at Turkmenistan to diversify its energy imports, particularly after the 2014 Ukrainian Crisis that froze the relations between Moscow and Brussels. On the other hand, Ashgabat cannot cut all its ties with Moscow because the two countries have historical and cultural ties based on the past Soviet period and the Russian Federation still represents a key actor in Central Asia. Furthermore, Ashgabat and Moscow might cooperate in the logistics and transport sector of the Caspian Sea region, creating a connection between the International Seaport of Turkmenbashi and the Dagestani port of Makhachkala since the Kremlin has promoted a strategy to transform this port into a regional logistic hub (Geopolitics of Makhachckala Sea Trade Port in the Caspian Sea and Eurasian interconnectivity).

Considering the current Afghan situation and the uncertain future of the Taliban interim government, in the short period, Ashgabat will continue to balance its regional policy between the European Union and the Russian Federation evaluating which side might offer the best opportunities and the highest amount of investments for the national Turkmen infrastructural projects. Furthermore, Turkmenistan will continue interacting with regional actors such as Uzbekistan to establish partnerships in commercial trade and logistics and maintain the security and stability of Central Asia (How Afghanistan is influencing the Turkmenistan-Uzbekistan cooperation). In this context, it is not possible to underestimate the rising role of Turkey in Central Asia, so even in Turkmenistan, since Ankara has promoted its regional policy based on pan-Turkism and economic partnership among Turkic-speaking countries to establish an organisation able to contrast Moscow’s Eurasian Economic Union, the European Union and Beijing’s Belt and Road Initiative (Turkey and pan-Turkism in Central Asia: challenges for Russia and China).