Turkmenistan gas pipeline -- Higher energy prices
May 16, 2007
Turkemenistan natural gas will be piped through Kazakhstan and Russia to Europe, thanks to a new gas pipeline agreement signed by the three countries on May 12. When complete, the pipeline will allow 80 billion cubic metres per year of Turkmen natural gas to be sold through Gazprom, Russia’s state owned natural gas monopoly. This is double the amount sold in 2006.
What the Turkmenistan gas pipeline means:
If Putin were not involved, the additional gas through the Turkmenistan gas pipeline would mean lower energy costs. However, Putin is using Russia's natural gas reserves to increase his power and that of Russia in the region. (See Russia takes over Sakhalin-2)
This Turkmen gas pipeline agreement is another barrier in the relationship between Russia and the EU, which will see it as another example of Putin’s “pipeline politics.” (See Merkel meets with Putin) It will also weaken chances of a successful G-8 summit meeting, due to take place in Germany in June. Putin hosted last year’s G-8 summit, and used it to further his own agenda. (See G-8 summit)
Of more importance is the strategic significance of the agreement. For one thing, it ends the weak U.S. attempt to build a gas pipeline that excluded Russia.
Turkmenistan has more natural gas (2 trillion cubic meters) than Canada. Other experts estimate the Caspian could hold "possible reserves" of up to 233 billion barrels of oil. ("Possible reserves" are considered to be 50 percent probable.) By comparison, Saudi Arabia has 261 billion barrels of oil and the United States 23 billion. The U.S. EIA says that the Caspian only has 33 billion barrels of proven oil (Proven means that experts agree it is 90% probable.)
Action steps:
- Profit from higher energy prices by including a good commodities fund in your investment portfolio.
- Lessen your own costs related to high energy prices by following the tips outlined in the World Money Watch Special Report “Oil’s Hidden Threat”.
Source: RFE, 5/12/07 “Central Asia: Russian, Turkmen, Kazakh leaders agree on Caspian pipeline,” ITAR/TASS, 5/12/07 “New Caspian gas pipeline to increase Turkmen gas purchases,” Related articles:
Turkmenistan elections, 2/14/07
Natural gas cartel would rival OPEC, 816/06
Sakhalin news bad for Japan’s economy, 5/207
SCO meeting,5/2006
Turkey’s EU entry delayed,11/28/06
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