China Seeks New Turkmen Energy Deals

China’s foreign ministry says it expects further energy deals to be signed when Turkmen president Gurbanguly Berdymuhammedov visits Beijing on November 22-25.

According to NBCentralAsia experts, the top agenda items will be the price China is willing to pay for Turkmen natural gas, and the possibility of increasing the volume of gas flowing through the pipeline between the countries, which has been in operation since the end of 2009.

The pipeline is operating at a fraction of its intended capacity, so there is scope for expansion assuming Turkmenistan can access more of its vast underground reserves. But price could be an issue, as Turkmen officials want more than the current 150 to 160 US dollars per 1,000 cubic metres.

Chinese demand for energy is growing year by year, and Central Asia is a relatively cheap and easy source, especially with the overland pipeline in place. Uzbekistan also supplies China with gas via this route.

Russia is hoping to meet some of the demand with a new pipeline Siberia planned for 2015. Again, price could be an obstacle as Russia is charging other customers over 400 US dollars per 1,000 cu m. Even if Turkmenistan asks for a bit more, it will need to undercut Russian gas.

Annadurdy Hadjiev, a Turkmen economic analyst based in Bulgaria, says Beijing has an interest in holding down the price it pays for Turkmen gas so that it can then cite this in negotiations with Moscow. So President Berdymuhammedov is likely to face some hard bargaining in China.

This article was produced as part of IWPR's News Briefing Central Asia output, funded by the National Endowment for Democracy.

If you would like to comment or ask a question about this story, please contact our Central Asia editorial team at feedback.ca@iwpr.net.