By Franz J. Marty (03/04/2015 issue of the CACI Analyst)
CASA-1,000 envisages hydro-electricity exports from Kyrgyzstan and Tajikistan to Afghanistan and Pakistan. Due to the security situation in Afghanistan and Pakistan, a study designated CASA-1,000 a high risk project. Recently concluded agreements between the participating countries, the currently ongoing procurement and the completed construction of another transmission line nonetheless promise a realization.
By Tavus Rejepova (03/04/2015 issue of the CACI Analyst)
Azerbaijan's, Turkey's, and Turkmenistan's Ministers of Foreign Affairs Elmar Mammadyarov, Mevlut Cavusoglu and Rashid Meredov gathered in Ashgabat on January 29 to discuss regional energy and transportation issues.
Cavusoglu, leading a big delegation, arrived in Ashgabat on January 28 to meet with President Berdimuhammedov and discuss the next day's trilateral meeting as well as Berdimuhammedov's expected visit to Turkey on March 3. Cavusoglu also met separately with his counterpart Meredov to discuss energy security, transportation and expansion of the current state of commercial ties. Turkey is Turkmenistan's main trade partner and Turkey represents the highest presence of foreign companies in Turkmenistan, at over 600 companies.
Mammadyarov met with President Berdimuhammedov on January 29 before the trilateral ministerial meeting and discussed enhancing commercial ties between the two countries. Referring to his last visit to Ashgabat five years ago, Mammadyarov expressed satisfaction with the current level of relations between Azerbaijan and Turkmenistan.
During the trilateral meeting between the ministers of foreign affairs, the sides discussed cooperation in the areas of trade, energy, transportation and education. In particular, the ministers stressed the Afghanistan-Turkmenistan-Azerbaijan-Georgia-Turkey transportation link project aimed at increasing trade and reducing cargo transit expenses among these countries, as an important objective. Representatives of these five countries met in Ashgabat in November 2014 over the draft agreement of this transport corridor.
Following the talks, the sides also decided to create a trilateral format for the oil and gas company representatives of the three countries. The ministers of Turkey and Azerbaijan reportedly invited Turkmenistan to join the Trans-Anatolian gas pipeline (TANAP) project, which envisages delivering gas from Azerbaijan's Shah Deniz field to Europe via Georgia and Turkey.
President Berdimuhammedov has stated earlier stated that the trans-Caspian pipeline, intended to bring Turkmen gas to Europe via TANAP, only requires the consent of two countries (Turkmenistan and Azerbaijan) whose seabed sectors these pipelines would cross. But Russia's Minister of Foreign Affairs Sergey Lavrov has stated that "the project of the trans-Caspian gas pipeline falls into the category of projects that affect the interests of countries that do not participate in it" expressing concern over the project. Maros Sefcovic, the European Commission's Vice President in charge of Energy Union, stressed the importance of addressing the technological and legal issues of transporting Turkmen gas to Azerbaijan in his address to reporters on February 12. Speaking at Turkmenistan's Oil & Gas Conference in Ashgabat in November 2014, Rovnaq Abdullayev, the CEO of Azerbaijan's energy company SOCAR, expressed readiness to provide Azerbaijan's developed infrastructure, diversified oil and gas pipeline network, warehouses and terminals, fleet of ships and other assets needed for implementing projects in the oil and gas industry to its neighbors in the region, primarily to Turkmenistan.
During the trilateral meeting in Ashgabat, Mammadyarov also met with Cavusoglu to discuss regional cooperation, highlighting President Ilham Aliyev's visit to Turkey on January 14-15, 2015.
The first trilateral meeting between the foreign ministers of Turkey, Azerbaijan and Turkmenistan took place in Baku on May 26, 2014, when the "Baku Statement" was released, expressing the three countries' determination to develop trilateral relations in various fields, particularly in energy, trade, transportation, culture, tourism, education and environmental protection through joint projects and cooperation initiatives.
As a result of the Ashgabat meeting, the foreign ministers signed a joint declaration and adopted a trilateral framework cooperation program for 2015-17. The foreign ministers also agreed to organize a trilateral meeting between the presidents of Azerbaijan, Turkey and Turkmenistan in Ashgabat, planned for October of 2015, which is expected to expand the trilateral partnership in energy, transportation and communication sectors to new levels. The next trilateral meeting between foreign ministers is slated to be held in Turkey.
By Eka Janashia (01/22/2015 issue of the CACI Analyst)
At the beginning of 2015, Russia’s state-owned oil producer Rosneft entered Georgia’s oil retail market by purchasing a 49 percent stake of Petrocas Energy Ltd. Petrocas’ affluent assets include an oil terminal in Georgia’s Black Sea port of Poti with a capacity of 1.9 million tons per year as well as a network of 140 gas stations in Georgia under the Gulf brand.
By launching a joint venture with Pertocas, Rosneft will gain high-quality storage capacity in one of the major oil and oil products hubs in the region, enrich supply routes options and enhance its operations in the Central Asia and South Caucasus oil market. “[It] is a new milestone that will highlight the strategic importance of the South Caucasian energy corridor,” the main shareholder of Petrocas, Russian businessman David Iakobashvili said.
The opposition United National Movement (UNM) party insisted that Rosneft plans to acquire a controlling interest in Petrocas and called on the government to revoke a deal damaging to state interests. The government responded that it was during UNM’s term in power that Russian investments penetrated strategic areas of Georgia’s economy such as finances, electricity, chemicals, ore industry, food and dairy products. For example, at that time, the Russian state-owned electricity trader, Inter RAO, obtained 75 percent of Tbilisi’s electricity distribution company Telasi, thermal power generating plants, as well as the management right of two hydro power plants; Khrami I and Khrami II. The government also lamented that it has no right to influence private business, especially the decisions of Petrocas, which is registered in Cyprus and manages its operations from there.
UNM counter-argued that Rosneft operations in Abkhazia breach the Law on Occupied Territories and that the government is obliged to cancel the agreement granting the Russian company “the most important communications on the country’s Black Sea shore.”
Indeed, in 2009 Rosneft started offshore explorations and development of oil and gas fields in Abkhazia under an agreement signed between the company and Abkhazia’s de facto government. Against this background, three of Georgia’s government agencies began to study the legitimacy of the Rosneft-Petrocas deal. The results are yet unknown.
The recent deal reflects Russia’s strategy to strengthen its infrastructure capabilities in the South Caucasus to ensure an uninterrupted delivery of oil as well as other products to Armenia, which recently became a member of Eurasian Economic Union (EEU) but lacks land access to other EEU members in the absence of common borders. The reconstruction of the railway through Abkhazia and the planned Avro-Kakheti highway from Dagestan to eastern Georgia and then to Armenia, can be understood in this light.
While improving Armenia’s situation is Moscow’s key rationale, the Kremlin is also interested in consolidating its position in the Georgian market. UNM asserts that the Rosneft-Petrocas deal is only the beginning of “a big process” and unless countervailing measures are taken, “Moscow will have no obstacles at all.”
On January 17, Iase Zautashvili, the General Director of Airzena, Georgia’s national airlines, disclosed correspondence between Georgian and Russian state agencies regarding the prospect of restoring flights between the two countries. These clandestine negotiations aim to grant Russian companies a monopolistic position in Georgian airspace, Zautashvili said.
Referring to other covert correspondence taking place between the Russian and Georgian sides via the Swiss Embassy, UNM claims that 11 Russian companies, including Vladimir Putin’s Private Company, will enter Georgia’s airspace by dumping prices and eliminating the competition, including the national airlines, in order to obtain a monopolistic position in the Georgian market. The UNM also claims that some of these companies fall under the international sanctions against Russia while others have violated the Law on Occupied Territories.
The Enguri hydropower plant with a total capacity of 1,300 megawatts could become another target of Russian strategic interest. Russia allegedly intends to register Georgia’s most powerful hydroelectric station in the region in Abkhazia. Although Georgia’s Ministry of Energy categorically denies that the plant’s ownership is under discussion, Aslan Basaria, Director of Abkhazia’s power company Chernomorenergo, claims that negotiations have already been launched with participation of the Georgian side. “The plant is located on Georgian territory and belongs to the Georgian state. The Chernomorenergo Director General’s statement is far from reality,” the Ministry of Energy says. Despite the denial, Sokhumi in fact raised the question of the Enguri hydropower plant’s ownership a month ago when Abkhazia’s de facto leader Raul Khajimba said “what is located on our territory should be owned by the Abkhaz people.”
In fact, the Enguri generators are located on the territory of occupied Abkhazia while its arch dam is in the Georgian-controlled area. According to the informal agreement reached between Tbilisi and Sokhumi in the 1990s, Abkhazia gets 40 percent of the electricity generated by the plant free of charge while the rest goes to Georgia. The fact that the agreement terms are rather favorable to the Abkhaz side suggests that the questions raised over the plant’s ownership comes from Moscow, rather than Sukhumi.
Taken together, signs are emerging of several steps taken by Russia to make inroads into vitally important sectors of Georgia’s economy.
By Tavus Rejepova (12/10/2014 issue of the CACI Analyst)
President Almazbek Atambayev, leading a large government delegation from Kyrgyzstan discussed the possibility of importing electricity and petroleum products from Turkmenistan during the official talks with his counterpart President Gurbanguly Berdimuhamedov in Ashgabat on November 11, 2014. Within the framework of the visit, a package of numerous bilateral agreements was signed to increase the level of commercial and economic ties between Kyrgyzstan and Turkmenistan.
The agreements include an agreement on establishing a Turkmen-Kyrgyz Intergovernmental Commission for trade, economic, scientific, technical, and humanitarian cooperation; an agreement between Turkmenistan’s State Committee for Sports and the State Agency for Physical Culture and Sports under the Government of the Kyrgyz Republic on cooperation in the sphere of physical culture and sports; a cooperation agreement between the ministries of culture of Kyrgyzstan and Turkmenistan; a cooperation agreement between the Chambers of Commerce of Kyrgyzstan and Turkmenistan; a Memorandum of cooperation between the Diplomatic Academy of the Ministry of Foreign Affairs of Kyrgyzstan and the Institute of International Relations of the Ministry of Foreign Affairs of Turkmenistan; an agreement between the governments of Kyrgyzstan and Turkmenistan on cooperation in providing reciprocal assistance over tax legislation compliance; an agreement between Kyrgyzstan’s State financial Intelligence Service and Turkmenistan’s Ministry of Finance on cooperation against money laundering and terrorism financing; and an agreement on cooperation in physical training and sports.
During the high level talks, President Berdimuhamedov said that Kyrgyzstan is Turkmenistan’s strategic partner in the yet-to-be constructed pipeline (Line D of the Turkmenistan-China gas pipeline) that will be constructed through the territories of Uzbekistan, Tajikistan and Kyrgyzstan to eventually reach China. Within the framework of the top level talks, Kyrgyz President Atambayev mentioned that Turkmenistan is currently ready to help Kyrgyzstan with electricity supply in the amount of 700 million kWh per year and increase this amount up to 1 billion kWh next year. Though this announcement came out during the press conference, no agreement, either on cooperation in the electricity sector or purchases and sales, was signed during the visit. The sides have not made it clear how and which route they would go to sell the promised electricity.
The only viable route to import electricity from Turkmenistan to Kyrgyzstan is through Uzbekistan but it was not clear how Kyrgyzstan was going to address the problem of transit via Uzbekistan. It is noteworthy that in 2009 Uzbekistan cut Turkmen electricity exports to Tajikistan across its territory when Uzbekistan withdrew from the united power grid of Central Asia’s electricity system. No electricity cooperation was mentioned during Uzbek President Islam Karimov’s visit to Turkmenistan on October 23-24. The Kyrgyz Deputy Prime Minister Valery Dil visited Ashgabat on October 25-26 to meet with President Berdimuhamedov and other government officials but no announcement was made to possibly addressing this standing issue.
Turkmenistan currently sells electricity to neighboring Afghanistan, Iran, and Turkey, and has held talks to sell to Pakistan in the future. In April 2013, the country introduced a US$ 5 billion plan to develop Turkmenistan’s power industry for the period 2013-2020 and announced plans to increase the current export amount of about 2.5bln kWh by five times within this period.
President Atambayev’s visit to Ashgabat followed his state visit to Kazakhstan on November 7 where he and his counterpart Nursultan Nazarbayev agreed on the import of one billion kWh of Kazakh electricity to Kyrgyzstan during the winter. This is in addition to an earlier report saying that Kazakhstan was going to supply 500 million kWh for water provided by Kyrgyzstan during the irrigation period. Kazakhstan is expected to produce an estimated amount of about 100 billion kWh of electricity in 2014. Kazakhstan and Turkmenistan’s possible electricity supply could significantly help Kyrgyzstan address its serious power deficit during the winter. The cost of electricity in Kyrgyzstan is expected to increase given that the reservoirs feeding hydropower dams are about twenty percent lower than usual. Kyrgyzstan’s power shortage is further exacerbated by uncertainty regarding the winter gas tariffs after Russia’s Gazprom bought 100 percent of Kyrgyzgaz for a symbolic US$ 1 with its estimated US$ 40 billion debt.
Atambayev has also expressed Kyrgyzstan’s interest in importing petroleum products from Turkmenistan such as gasoline. Relations between the two countries started improving this year, manifested in President Atambayev’s first-ever official visit to Turkmenistan. Turkmenistan appointed an ambassador to Kyrgyzstan in August this year, following Kyrgyzstan’s appointment of a new ambassador to Turkmenistan in July.
By John C.K. Daly (11/26/2014 issue of the CACI Analyst)
At a seminar in Dushanbe on November 11, Uzbekistan’s Environmental Protection State Committee specialist Muhammadzhon Hojayev proposed collaborating with Tajikistan and Kyrgyzstan to conduct aerial survey studies of glacier melt in the Tien Shan and Pamir mountain ranges to assess the problem, as the last aerial surveys were done 14 years ago. The problem is accelerating; UN Regional Center for Preventive Diplomacy for Central Asia Deputy Head Fedor Klimchuk told seminar participants, “The main reason of glaciers melting is climate warming and man-induced factors. Glaciologists say glaciers may disappear by the end of this century.”
The Central Asia-Caucasus Analyst is a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center affiliated with the American Foreign Policy Council, Washington DC., and the Institute for Security and Development Policy, Stockholm. For 15 years, the Analyst has brought cutting edge analysis of the region geared toward a practitioner audience.