Turkmenistan has more gas than the US and Saudi Arabia combined but not many export routes. Turkmenistan is betting on stability in Afghanistan to change that

A fire has raged for 47 years in the Karakum Desert in Turkmenistan. The “Door to Hell” was set ablaze by Soviet engineers, who wanted to prevent the spread of poisonous methane gasses to nearby settlements from a collapsed oil excavation. Ever since the fire has fed on Turkmenistan’s formidable gas reserves.

In 2018, BP estimated that Turkmenistan—a country of 5.5 million people—has gas reserves of 19,500 billion metric tons. That is more than the reserves of the United States and Saudi Arabia combined and only surpassed by those of Russia, Iran, and Qatar. Turkmenistan might have won the resource lottery, but it has struggled to overcome its geographic isolation to reach customers and has magnificently mismanaged its energy resources and economy.

Right now China is the only buyer of Turkmen gas, which is transported on the Central Asia-China gas pipeline that opened a decade ago. Until 2009, Turkmenistan relied on Russia’s pipeline network. Gazprom bought Turkmen gas and re-exported it to European markets on a premium. With nowhere else to export its gas, Turkmenistan had no other option than bow to the prices dictated by Russia. After the opening of the Central Asia-China pipeline, Turkmenistan has become more assertive in its efforts to renegotiate the price. The efforts broke down in 2016, and Gazprom seized all purchases of Turkmen gas, in turn, leaving Turkmenistan into a poor bargaining position vis-a-vis the Chinese. Late last year, Russia and Turkmenistan finally reached a deal on the resumption of gas supplies later this year. Also, Iran has received small amounts of Turkmen gas in exchange to goods and agricultural products, but the arrangement broke down in 2017 when the countries failed to settle an old dispute over Iran’s missed payments. Turkmenistan was exporting gas to Iran in exchange for Iranian imports, e.g. food. Turkmenistan accuses that Iran has failed to honor its side of the agreement and owes Turkmenistan over $1 billion.

The news of a possible peace agreement in Afghanistan is raising Turkmenistan’s hopes that it can finally reach new customers in the south. The TAPI-pipeline, which would cross through Afghanistan to Pakistan and India, was planned in the 1990s. When the construction designs were unveiled in 1995, it was supported both by the United States and the Taliban. However, after Al-Qaeda bombed the US Embassies in Kenya and Tanzania in 1998, Washington withdrew from the project, leaving the pipeline’s plans buried beneath the deteriorating situation in Afghanistan.

In 2015, however, the project officially re-launched, and last year construction of the Afghan section began. Despite the Taliban’s pledge to not disrupt the construction, only a couple months into work, a deadly terrorist attack hampered the progress. In May 2018, six workers who were de-mining the route in the Kandahar province were killed in an attack that was linked to the Taliban.

Construction has nevertheless continued, and on a recent visit to Pakistan, Muhammetmyrat Amanov, the chief executive of the TAPI Pipeline Limited Corporation, insinuated that the pipeline would be completed in 2020. If achieved, the $10 billion pipeline will deliver a total of 33 billion cubic meters of natural gas annually. Both India and Pakistan will receive 14 billion, and Afghanistan 5 billion tons, according to the plan.

The precarious security situation is, however, not the only reason to caution the optimism. No one seems to know how much of the pipeline is really built and how much money has been invested in the project. In November 2018, Saudi Arabia announced that it would donate 35 km of pipeline materials for the Turkmen section. Officially, however, the Turkmen section was completed last spring. This discontinuity shouldn’t be a surprise to anyone who has followed Turkmenistan—officials often publicly announce blatantly false statements.  

According to official figures, Turkmenistan’s economy grew by 6% in 2018. In reality, however, it is in crisis. Turkmenistan is an exceedingly closed country even on Central Asian standards, but in recent months the few reports that have reached the outside world have painted a stark picture of dire shortages of basic commodities. Reports say that even in the shiny capital of Ashgabat, where only white cars are allowed to drive amidst the marble buildings, the shop shelves have often been empty, and shortages of even basic goods like flour and sugar have been severe. The state television shows the President Berdimuhamedov inspecting the abundance of goods, but an Austria-based opposition site, the Chronicles of Turkmenistan recently reported that they had received leaked documents from the Ministry of Agriculture, which starkly contradict the official production figures. Instead of the official 1.1 million tons of cotton that was reportedly produced in 2018, real production is under 500,000. The real wheat production is only a third of the official figures, according to the leaked documents. As an indication of the troubles, the agriculture minister has been changed twice in the last two months. The President, of course, has the situation under control: in December, he announced that the Turkmen stability fund has now sufficient capital to deal with any potential economic shocks. The size of the fund is unknown.

map of region (in Spanish, from easyviajar.com)

Turkmenistan remains the most closed, obscure post-Soviet country in a part of the world that boasts its fair share of peculiar autocrats. The personality cults of the Turkmen leaders are so absurd that the exiled opposition sites can just put up real Turkmen state television footage up on YouTube as comic reliefs. It is also a state that sits on top of a still largely unexplored, magically rich gas fields.

But the changes around Turkmenistan raise the hopes that finally the gas wealth could become more than just potential. Last year’s Caspian Sea agreement opens the possibility to finally construct a pipeline to Europe. A new $1.5 billion harbor on the Caspian shore opened last year, and Turkmenistan hopes that it can become one of the key knots in China’s Belt and Road. The security situation in Afghanistan remains precarious, but if the TAPI pipeline is completed, Turkmenistan could finally start to reach customers in all directions.