RusEnergy

March 26, 2009 - EurasiaNet by Sergei Blagov - It is clear that nothing happened during Turkmen leader Gurbanguly Berdymukhamedov’s just-concluded visit to Moscow that could shake up a stalling relationship. Experts are still wondering, however, about what exactly occurred during Berdymukhamedov’s talks with top Russian officials, including President Dmitry Medvedev. The visit did not produce a desired agreement that would have advanced Russia’s energy agenda in the Caspian Basin. Talks reportedly concentrated on the Prikaspiiski pipeline project, which would vastly expand an existing network to facilitate large-scale exports of Central Asian energy via Russia. Russian officials apparently urged Berdymukhamedov to recommit to implementing the project, which has remained stalled since its announcement almost two years ago. [For background see the Eurasia Insight archive]. The visit ended with vague endorsements by both Medvedev and Berdymukhamedov of the bilateral "strategic partnership." The two sides also signed a group of relatively minor agreements, including several covering transportation, education and security contacts. In trying to put a positive spin on the lack of progress on the pipeline project, Medvedev indicated that a final agreement was merely a matter of time. "I think that in the near future we’ll move toward signing it," Medvedev said at a joint news conference on March 25. Presidential aide Sergei Prikhodko followed up on Medvedev’s comments by insisting that "there are no differences" in the bilateral relationship, the Itar-Tass news agency reported. Prikhodko also announced that Energy Minister Sergei Shmatko would travel to Ashgabat to finalize the deal on what he termed the "East-West" gas pipeline. The "East-West" 600-kilometer spur would connect Eastern Turkmenistan to the Prikaspiiski network, at an estimated cost of up to $1.5 billion. In 2008, the Russian state-controlled energy giant Gazprom pledged to finance the project using its own funds. Some commentators in Moscow are not taking Medvedev’s and Prikhodko’s comments at face value. The skeptics point to the fact that Gazprom representatives and political leaders were optimistic on the eve of the Medvedev-Berdymukhamedov talks that a breakthrough was at hand. When the visit ended without any agreement, however, no one would offer an explanation for the turn of events, and Foreign Minister Sergei Lavrov and top Gazprom executive Alexei Miller conspicuously avoided speaking to journalists. A few Russian commentators have expressed doubts that the "East-West" spur deal will ever get done. According to a commentary in the Kommersant business daily on March 26, Turkmenistan is hesitating because it now doubts that Russia has the financial capacity to complete it. The Russian economy has been one of the hardest hit in the world by the global financial crisis. The Prikaspiiski project is likely to be abandoned because the low price of natural gas does not make it financially viable, the Kommersant commentary added. Meanwhile, Andrei Grozin, an analyst at the Moscow-based CIS Institute, said that under present circumstances, Gazprom is not in position to assume the financial risk of financing the "East-West" spur. Helping to foster the impression in Ashgabat’s mind that Moscow suddenly finds itself cash-strapped, Russian officials apparently indicated during the Berdymukhamedov visit that they were not in position to assist with the Turkmen leader’s request for financial assistance for a 697-kilometer railway project to connect Kazakhstan, Turkmenistan and Iran. Russian Railways revealed in mid-March that is under fiscal pressure, forcing it to cut back its 2009 investment program to 262 billion rubles ($7.8 billion) from an originally envisioned 400 billion rubles ($11.9 billion).