Russia appears to be practicing a bit of “divide-and-conquer” politics in Central Asia, and state-owned Gazprom is spearheading the campaign.
On January 4, Russia’s main news agencies quoted a “source” within Gazprom Export, the Gazprom wing charged with handling gas imports from other countries, saying Russia would not be importing any gas from Turkmenistan this year. Shortly after, those same Russian news agencies quoted what they said was the same source saying a new deal had been reached for gas supplies from Uzbekistan.
With the S&P 500 falling a double-digit percentage in the first half, most equity hedge fund managers struggled to keep their heads above water. The performance of the equity hedge fund sector stands in stark contrast to macro hedge funds, which are enjoying one of the best runs of good performance since the financial crisis. Read More
At the time, the “source” provided no further details. He or she did not need to; the reasons seem clear enough.
Turkmenistan has been a thorn in the Kremlin’s side for many years now. Turkmenistan downgraded its participation in the CIS to “associate” status a decade ago and Ashgabat does not participate in any of the Russian-led intra-CIS groupings, such as the Collective Security Treaty Organization (CSTO) or Eurasian Economic Union (EEU).
More recently, Turkmenistan, which has the world’s fourth-largest gas reserves, has been pushing to open new export routes, including one to Europe that would put Turkmen gas in direct competition with Russian gas.
And all this happened as Turkmenistan continued to sell gas to Russia. In fact, not so long ago Russia was Turkmenistan’s primary gas customer, buying some 45 billion cubic meters (bcm) of Turkmen gas in 2008.
That amount has dwindled, and Gazprom announced at the start of 2015 it would purchase only 4 bcm of Turkmen gas, not the 10 bcm the Russian company bought in 2014. Ashgabat complained bitterly about the 2015 reduction and later accused Russia of failing to pay for gas it received.
Small wonder that Gazprom, already with more of its own gas than it can sell, has now canceled all purchases of Turkmen gas.
But at the Qishloq, we think there is more to this development than just gas purchases.
As mentioned, the Gazprom Export “source” said the company would continue to buy gas from Turkmenistan’s neighbor Uzbekistan. In 2015, Gazprom also reduced the amount of gas it bought from Uzbekistan, from 4 bcm in 2014 to 1 bcm.
Gazprom chief Aleksei Miller confirmed a new agreement for gas purchases from Uzbekistan on January 5 and sources in his company said Gazprom would buy at least 3.1 bcm from Uzbekistan this year.
Uzbekistan’s ties with Russia are not much better than Turkmenistan’s ties with the former colonial master, and like Turkmenistan, Uzbekistan is not a member of the CSTO or EEU.
Not surprisingly, the Turkmen and Uzbek leaders have seen in recent years they share much common ground and the relationship between the two countries is probably the best it’s been since 1991 independence after the collapse of the Soviet Union. And not only has that left Russia with little influence in either country, it is an example of how some former Soviet republics in Central Asia can do without Moscow’s help, the sort of example the Kremlin would rather not see.
By rejecting any more purchases of Turkmen gas while at the same increasing the amount of Uzbek gas, Gazprom is creating a rift between the two Central Asian countries.
Turkmenistan only has two other customers for its gas at the present — China and Iran — and the Turkmen economy is beginning to show strains from lower prices of gas on world markets. It is a symbolic slap in Ashgabat’s face that Turkmenistan will not be selling even modest amounts of gas to Russia, and instead that revenue will be going to Turkmenistan’s neighbor.
There is more subtext here. Although Uzbek-Russian ties have never been great since the fall of the Soviet Union, Tashkent has allowed Gazprom and Russian company LUKoil to explore and develop gas and oil fields in Uzbekistan. This makes it difficult for Gazprom to cut ties totally with Uzbekistan. In fact, the gas Gazprom said it will buy from Uzbekistan is probably coming from gas fields Gazprom is developing.
Ashgabat has never allowed Russian companies to develop the huge onshore fields in Turkmenistan. The only company that has such a contract is the China National Petroleum Corporation. That makes it easy for Gazprom to cut ties with Turkmenistan.
There is one more point worth considering when reviewing Russia’s refusal to buy Turkmen gas, and it has nothing to do with hydrocarbons.
On January 3, the Russian news agency Interfax reported, Aleksandr Sternik, identified as the director of the Russian Foreign Ministry’s Third CIS Department, announced Russia is ready to assist Turkmenistan with security problems along the Turkmen-Afghan border. Sternik said, “Russia, Turkmenistan’s neighbors, its partners in the CIS have been monitoring with friendly attention the efforts of Turkmen friends to strengthen what actually is our common southern borders.” (Qishloq Ovozi has reported on these security problems, for instance, here, here, and here.)
Ashgabat denies there is any security problem along the Turkmen border with Afghanistan.
Sternik also mentioned that along the Turkmen-Afghan border “more resources are needed for solid protection than, for instance, on the Uzbek-Afghan border.” Again, Russia draws a distinction between the situations in Turkmenistan and Uzbekistan.
Gazprom’s January 4 announcements were a low-cost move that could pay big political dividends for the Kremlin in its effort to restore some of the lost Russian influence in Turkmenistan and Uzbekistan.
Editor’s note: Copyright (c) 2016. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.
Russia Seeks To Drive Wedge Into Central Asia by Bruce Pannier, EurasiaNet