Turkmenistan: Russia Plans to Resume Its Imports of Turkmen Natural Gas

3 MINS READOct 10, 2018 | 19:12 GMT
The Big Picture

In its 2018 Annual Forecast, Stratfor wrote that low energy prices would compound the socio-economic pressures in Central Asia, including in Turkmenistan, and as a result, Russia would increase its involvement in the region. A Russian deal to resume natural gas imports from Turkmenistan fits within this trend. 

What Happened

Russia will resume importing natural gas from Turkmenistan when the new year begins, Gazprom CEO Alexei Miller said during an Oct. 9 visit to Ashgabat, the Turkmen capital. "We are talking about the resumption of purchases of Turkmen gas by Gazprom in the very near future — from Jan. 1, 2019," Miller said, adding that details over volumes and pricing were still being worked out.

Why It Matters

Turkmenistan's economy relies on energy and natural gas exports in particular, and the country has been facing significant financial problems in recent years because of low energy prices and a lack of customers. Russia stopped importing Turkmen gas in 2016. A pricing dispute led Turkmenistan to cut off exports to Iran as well. As a result, the country has been dependent on China during the past few years and currently exports 30-40 billion cubic meters (bcm) of natural gas to China per year. But the price that China pays Turkmenistan has fallen, and much of the revenue Turkmenistan collects from the sale goes to financing Chinese loans for energy infrastructure development.

Russia thus offers Turkmenistan a much-needed supplemental market. Russia was its largest natural gas import partner until a pipeline rupture in 2009 (which was likely politically motivated) reduced supplies significantly before Russia stopped importing Turkmen natural gas completely in 2016. Before 2009, Turkmenistan exported more than 40 bcm of natural gas to Russia. That volume had fallen to 4 bcm in 2015. A resumption of exports to Russia could provide a major boon for Turkmenistan, but the extent to which it will give Ashgabat a financial reprieve will depend on pricing and volumes, which are being negotiated.

Why Now

Russia has not given an official reason for why it plans to buy Turkmen natural gas again, but there are likely several motivating factors behind the decision. One is that Russia could be seeking to elicit concessions from Turkmenistan in exchange for resuming the imports. Turkmenistan traditionally has pursued an isolationist foreign policy, resisting the kind of political, economic and security integration and cooperation efforts that many of its Central Asian neighbors have pursued with Russia. Increased security collaboration is particularly of interest to Russia, since Turkmenistan shares a border with Afghanistan, and Moscow has been actively building up its counterterrorism efforts in the region.

Russia also could be seeking to dissuade Turkmenistan from pursuing the Trans-Caspian gas pipeline, which could cut into Russia's own energy markets in Europe. Resuming natural gas imports from Turkmenistan could be a bid by Moscow to stymie such a project. Alternatively, Russia could be genuinely concerned about the deteriorating economic conditions in Turkmenistan and the potential for political instability that such conditions can cause, and is thus offering Ashgabat a hand to prevent the situation from spiraling out of control. Indeed, these motivations are not mutually exclusive, and they all could be playing a role in the decision to restart natural gas flows between the two countries.

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