Turkmenistan elections -- Hope for natural gas exports?

February 14, 2007

On Sunday, Turkmenistan held its first Presidential election in 12 years. The acting President, Gurbanguly Berdimuhammedov, is expected to “win”, since the election was not really free. The election follows the death in December of the former President, Saparmurat Niyazov. Known as “Turkmenbashi the Great”, Niyazov was an autocratic ruler who had been “elected” President for life in 1999.

However, the fact that an election was held at all is a sign that the new government is worried about potential domestic unrest, a result of decades of authoritarian rule. Turkmenistan is strategically located next to Iran, Afghanistan and the other petroleum-rich countries in Central Asia. Some energy analysts hope that the new government may encourge foreign investment to develop Turkmenistan’s vast reserves of natural gas.

What the Turkmenistan election means:

Russia has long had a monopoly on the gas pipeline, despite Turkmenistan’s independence from USSR rule in 1991. Turkmenistan has more gas reserves than Canada, but hasn’t developed them thanks to Russia’s control over former President Niyazov. The major gas pipeline from the country runs through Russia, and disputes with Russian gas giant Gazprom have led to several cutoffs in supplies

Germany, the EU, China, Iran, Turkey, Pakistan, India and even the U.S. are interested in developing Turkmenistan’s gas fields, if the new government can assure investors that their investments will not be nationalized. To gain access to the gas fields, new distribution pipelines and routes must be developed to circumvent Russia’s stranglehold.

Facts about Turkmenistan:

• 80% of country is desert
• Borders Caspian Sea, which is polluted
• Population is 90% Muslim
• GDP $45 billion,
• GDP annul growth rate 14%,
• GDP per person is $8,900- better than China or Brazil
• Oil proved reserves - 273 million barrels,
• Oil production - 213,700 bbl/day, mostly used internally
• Natural Gas proved reserves - 2.01 trillion cu m - more than Canada, 16th largest
• Natural Gas exports - 42 billion cu m

The country’s people have been severely repressed. Some of Niyazov’s most unpopular measures will be oveturned by Berrdimuhammedov, who promised to:

• Increase grade school education from 9 to 10 years.
• Increase university education from two to five years. The best students will be allowed to study abroad.
• Restore the pension plan which Niyazov had curtailed.
• Make sure there is enough seed and fertilizer to prevent bread shortages.
• Increase free access to the Internet.
• Allow residents to travel outside of the country.

On the other hand, Berrdimuhammedov is showing other signs of continuing an autocratic reign. One of the campaign’s opposition candidates, Nurberdy Nurmammedov, “disappeared” in December after he was taken away by government officials.

Action Steps:
Wait and see if the new regime is serious about developing the oil and gas reserves. If so, it could contribute to slightly lower oil and gas prices over the next five years.

Source: CIA World Fact Book, RFE/RL, “Turkmenistan: Presidential Election Deemed Neither Free Nor Fair”, February 12, 2007; RFE/RL, “Turkmenistan: Could Presidential Vote Open New Chapter?”, February 9, 2007; RFE/FL, “Turkmenistan: Explaining the Presidential Election”, February 8, 2007; RFE/RL, “Turkmenistan: Presidential Campaign Reflects Latent Social Tensions,” January 19, 2007; RFE/RL, “Turkmen Assembly Discussing Political Future”, December 26, 2006; RFE/RL, “Turkmenistan: Energy Analyst Discusses Impact of Niyazov’s Death,” December 21, 2006.