Turkmenistan possesses some of the world's largest natural gas reserves and prior to 2009 produced around 75 billion cubic meters (bcm) annually. But in 2009, the pipeline system transporting the majority of Turkmenistan's natural gas to Russia ruptured. After the pipeline was repaired, Russia only accepted natural gas at a rate of 10 bcm for 2010 — compared to 50 bcm in 2009 — because Russia was experiencing a glut from its own high levels of production. Turkmenistan has diversified by increasing exports to Iran and China by 12 and 5 bcm per year, respectively. However, Turkmenistan's exports are still down by more than 50 percent. Turkmenistan may be able to increase exports to China to 30 bcm per year, but it must compete with Kazakhstan and Uzbekistan and settle on a price with Beijing, which has been a sticking point for both sides. Turkmenistan's land-locked geographic position makes it necessary for the country to strike challenging strategic bargains with its energy-consuming neighbors in order to leverage its natural gas resources.
