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Do all roads lead to Ashgabat?

The recent summit of Turkic-language countries in Ankara provided Turkmenistan's President Saparmurad Niyazov with the opportunity to insist yet again that his country and his person are central, if not key, to the resolution of major problems in the region. His suggestion that the next Turkic summit be held in Ashgabat inevitably recalls his plan for a summit of the Caspian Sea states in the port city of Turkmenbashi.

That meeting—which was scheduled to be held earlier this year, then twice postponed due to the parties' inability to reach agreement prior to the summit (such that the summit itself would be pointless)—has now been indefinitely postponed. The most optimistic prediction made so far is that of Viktor Kalyuzhnyi, Russian President Vladimir Putin's special envoy for Caspian affairs, who says that such a summit may be possible by the end of 2001.

1. The Kyapaz/Serdar conflict and its background

However, Kalyuzhny's prediction was made before the Turkic summit in Ankara, and developments since then do not augur well. One of the issues that has faded into the background somewhat amid discussions of Iran's position as the "odd man out" among the Caspian littoral states is the disagreement between Turkmenistan and Azerbaijan over rights to a field with estimated reserves of 500 million barrels that Baku calls Kyapaz and Ashgabat calls Serdar.

In early July of 1997, the State Oil Company of the Azerbaijan Republic (SOCAR) and the Russian oil companies, LUKoil and Rosneft, signed an agreement on the development of this offshore field. This agreement, however, contradicted the Russian Foreign Ministry's insistence at the time that the Caspian Sea should be considered an "inland lake" under international law. (Russia then held the position that no littoral state could exert control over seabed resources or take unilateral action without the agreement of all such states.)

Later that month, Rosneft pulled out of the agreement because Turkmenistan challenged Azerbaijan's rights to Kyapaz. Turkmenistan claimed rights to this field, which it called the Serdar field and for which it announced tenders for development in September of 1997. Turkmenistan had originally sought to include the Azeri and Chirag fields, to which the Azerbaijan International Operating Company (AIOC) holds rights, in a broader claim, but in the end it focused on the Kyapaz/Serdar field. SOCAR made it clear to all concerned that in its view Turkmenistan had no legal basis or right to the contested field, and by the spring of 1999 this conflict had become the main outstanding issue in relations between Azerbaijan and Turkmenistan.

2. Where the Trans-Caspian gas pipeline project comes in

In 1999, Niyazov tried to hold agreement on the Trans-Caspian Gas Pipeline (TCGP) project hostage to the outcome of the Kyapaz/Serdar dispute. The question was over the volumes of natural gas from the two sides to be allocated to the TCGP, the fate of which was tied to efforts to obtain a regional agreement on the Baku-Tbilisi-Ceyhan (BTC) main export pipeline.

Because the United States insisted that the AIOC's Azeri and Chirag oil fields belonged indisputably to Azerbaijan, Turkmenistan showed little interest in helping Washington facilitate an accord on the BTC pipeline. Turkmenistan's position then seemed to change in September of 1999, when Azerbaijan threatened to insist that national sectors in the Caspian be delimited before it helped to build the Trans-Caspian Gas Pipeline (TCGP).

Coincidence or not, one result of the November 1999 OSCE summit in Istanbul, where documents covering both the TCGP and BTC projects were signed, was that Azerbaijan and Turkmenistan agreed not to allow the Kyapaz/Serdar disagreement to stand in the way of cooperation on the TCGP. But other obstacles arose early in 2000. The conflict between Azerbaijan and Turkmenistan escalated when Azerbaijan sought to secure space in the TCGP for gas from its offshore Shah-Deniz field, where unexpectedly large gas reserves had been discovered. Baku asked for a quota of 14 billion cubic meters per year (bcm/y), nearly half of the TCGP's projected volume of 30 bcm/y.

According to the original projections, Turkey contracted to receive 16 bcm of Turkmenistani gas per year via the TCGP for its domestic market. Turkmenistan, meanwhile, planned on using the pipeline's remaining volume to obtain much needed hard currency by sending 14 bcm/y of gas to Turkey for re-export to Europe. After the TCGP talks in Ashgabat faltered in mid-February, Azerbaijan and Turkmenistan clashed. Azerbaijan threatened to construct its own pipeline with the BP-Amoco-led Shah-Deniz consortium, and this project has since gone independently forward.

3. Kyapaz/Serdar demarcation: A case study in a never-ending story

Niyazov addressed the Kyapaz/Serdar issue in public statements following the recent Turkic summit in Ankara. He said that Turkmenistan and Azerbaijan had agreed to go forward with discussions on the delimitation of their national sectors in the Caspian in the region of the Kyapaz/Serdar field. He and Aliev in fact held discussions at the summit, their first face-to-face talks in several years. They agreed to consider the Kyapaz/Serdar issue in the context of problems connected to the definition of the new international legal status of the Caspian Sea. (About 25 % of the Kyapaz/Serdar deposit would probably lie in Turkmenistan's sector of the Caspian Sea if the Caspian were divided by the median-line rule.)

A bilateral expert commission on demarcation was created in 1998, but it never met. Aliev and Niyazov agreed in Ankara that it should actually meet, and its work was to help set the stage for the summit in Turkmenbashi later this year. And meet it did, in Ashgabat in early May. However, it broke up a few days later in a shower of recriminations from the Turkmenistani side, which charged that the Azerbaijani side was responsible for the "total deadlock." Niyazov declared that the demarcation issue should be decided by international-law experts without input from representatives of industrial interests.

In the past, Azerbaijan had offered to assist in joint exploitation of the deposits, which Turkmenistan is unable to undertake alone in a cost-effective manner. However, Ashgabat has consistently rejected such proposals. It is therefore reasonable to infer from current news reports that Baku has failed to accede to a request from Ashgabat, in line with the latter's public diplomatic position, that all sides (meaning Azerbaijan) desist from industrial activities (meaning research and exploration) in the disputed zone until agreement is reached (possibly meaning indefinitely).

4. Another "take" on Caspian demarcation

Meanwhile Kazakhstan proposed a bilateral agreement with Azerbaijan on demarcation in the Caspian. Both of these countries have signed bilateral agreements with Russia providing for use of the "modified median-line" principle for defining national sectors, with the seabed and subsoil resources divided between the sides and waters remaining in common.

The line dividing them joins the edge of the Russian sector in the north and the edge of the Turkmenistani sector in the south.

According to reports, Kazakhstan is already in consultation with Russia on the coordinates of their bilateral line of demarcation, which would fix the northernmost point of the Kazakhstan-Azerbaijan line. It will be most interesting to see whether Russia and Kazakhstan can bring Turkmenistan along as regards the southernmost point. If the Turkmenistani side did make such an agreement, it would mark the first time that Ashgabat has made public a position in favour of the modified median-line principle.

As discussed by this writer earlier in the year, however, Ashgabat has undertaken a gradual rapprochement with the Russia-Kazakhstan-Azerbaijan position in Caspian demarcation, despite its rhetorical endorsement of the joint-rule principles advocated by Iran. Officials in Tehran insist that no decision can be taken on any Caspian matter unless all five littoral states take it consensually: that is, unanimously.

It is therefore of interest that reports of the initiative between Azerbaijan and Kazakhstan indicate that the two sides will, among other things, "manage sea-bed and subsoil mineral resources." This may possibly indicate that Azerbaijan has relented on the proposal, endorsed by Russia but opposed by Turkmenistan, that an official Caspian ecological centre be established in Baku in connection with the prospective conclusion of a definitive and universally accepted regime for the Sea.

5. The end of a different story

The TCGP, as well as the Kyapaz/Serdar issue, also came in for comment by Niyazov at the Turkic summit. The Turkmenistani president took the opportunity to blame Cumhur Ersumer, Turkey's former energy minister, for the problems with the TCGP. Towards the end of April, indictments were handed down against 15 individuals for bribery and kickbacks in the awarding of contracts for energy projects and power plants.

Because Ersumer could not be subject to legal pursuit as a minister, he was not one of the 15. However, according to press reports he was repeatedly mentioned by those who were indicted. Ersumer, who resigned shortly before the summit as a result of widening investigations into corruption scandals in the government, has himself blamed subordinates for the ways in which contracts were awarded.

Niyazov, for his part, blamed Ersumer for insisting on negotiating prices for delivery of Turkmenistani gas to the Turkish border, by implication requiring Turkmenistan to settle other terms of the deal including the volumes and cost of transit of the gas across Azerbaijan and Georgia. Whether true or not, this cannot be deemed unusual. All it means is that Ashgabat was being required to participate in negotiations with the PSG International pipeline consortium, which was then still interested in the project, as well as with Baku and Tbilisi.

However, the success in negotiating the BTC framework accords, which were signed at the late 1999 Istanbul OSCE summit, illustrates that even such a demand as Ersumer is supposed to have made is not outlandish and could even pass for normal practice.

Indeed, Niyazov's criticism of Ersumer cannot be taken as realistic, since it implies that Turkmenistan deserves to have the deal handed to it on a platter. The most telling comment may have been made by Aliev, who said when asked about the TCGP by an Azerbaijani journalist, "Why are you asking?" He continued: "We are only a transit country and... have no other interests here.... [Niyazov has] rejected the idea [and] it does not make much difference to us." Nor was there an on-the-record response from Ankara to Niyazov's statement that it was "up to Turkey" to choose whether it wanted the TCGP or not.

6. Next year in Ashgabat?

The first of the Turkic summits was held at the initiative of Turkish President Turgut Ozal in 1992, and the meetings have since become annual events. However, this year Niyazov criticized the summits as ineffective and without influence on international relations in general or on relations between the Turkic-speaking countries specifically. Interestingly, he also publicly declared that more should be done to attain "a union of Turkic states", called for a "consolidation" of the summit series and offered Ashgabat as the venue for next year's meeting. In this context, the state press agency of Turkmenistan has referred to a "Turkic-Speaking Countries' Organization", saying that Niyazov thinks such an entity should be further developed.

It follows, then, that we may look forward to another diplomatic initiative from Niyazov, one almost as ambitious as the Caspian Sea summit initiative but this time seeking to establish the Turcophone summit series as a self-supporting international institution with an autonomous secretariat. And as he has invited all the participants (Azerbaijan, Kazakhstan, Kyrgyzstan, Turkey, Turkmenistan, Uzbekistan) to Ashgabat for the next summit, we may presume that he intends to suggest that city as the seat of the organization.

Copyright © Robert M. Cutler unless otherwise noted.
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URL:  http://www.robertcutler.org/blog/2001/05/do_all_roads_lead_to_ashgabat.html
First published in FSU Oil & Gas Monitor, No. 131 (9 May 2001): 4–6.

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This page contains a single entry from the blog posted on May 8, 2001 5:44 PM.

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