World's Energy

04-21-2009 - Upstream OnLine - Turkmenistan hosts a high-profile energy conference this week which is likely to turn into a diplomatic battlefield between Russia and Europe, both seeking control over gas flows from the gas-rich Central Asian nation. Europe has courted Turkmenistan as it seeks to diversify supplies and reduce its gas dependence on Russia. Moscow is irritated by these overtures because it sees the former Soviet state as part of its traditional sphere of interest. Turkmenistan sells most of its gas through Russian gas monopoly Gazprom but it has shown growing willingness to open new lines to Europe as it develops untapped fields. Diplomacy intensified this month after a gas explosion on a key Turkmenistan-Russia pipeline highlighted the vulnerability of gas flows and reinforced the West's determination to end Turkmenistan's dependence on Russia. "This explosion has given Turkmenistan an additional excuse to seriously think about alternative supplies to Europe," Valery Nesterov, an analysts with Troika Dialog in Moscow, told Reuters. "It's a growing trend in Turkmenistan and it's understandable." Russia's energy minister, US State Department officials and executives from global multinationals will gather in Turkmenistan for the conference on Thursday and Friday. The official agenda is transportation of energy - a hot topic since the 9 April explosion which Turkmenistan says was caused by Russia's abrupt reduction of imports. Gazprom has not commented on Turkmen allegations. Analysts told Reuters Russia could benefit from reduced flows at a time when demand in Europe is falling, a worrisome assertion for Turkmenistan whose economy relies on Russian purchases. "The age of monopolies is coming to an end," a Turkmen government source told the news agency, adding that the Turkmen government saw diversification as key to preventing any further disruptions. Turkmenistan produces about 75 billion cubic metres of gas per year and sells about 50 Bcm to Gazprom. As part of its diversification, it is building a separate pipeline to China. The Nabucco pipeline, designed to ease Europe's reliance on Russia, will be at the centre of talks in Ashgabat this week but analysts said the project may be headed for failure unless the EU commits to buying Caspian gas quickly. There are also concerns that Turkmenistan, which has yet to confirm its reserves, has enough gas for everyone. As closed-door negotiations heat up ahead of the conference, the United States sent a senior State Department official to Turkmenistan last week, closely followed by a separate visit by a Russian Deputy Prime Minister. "The new administration in Washington is putting a lot of emphasis on Central Asia, and looking how we can develop our involvement here," US Assistant Secretary of State Richard Boucher said during that visit. "If you have problems with any particular line, whether the problems are technical or something else, you need to have other alternatives," he said. "The basic principle though that I think we all agree upon ...is that of diversification"