A natural gas giant
Few people may realize that when it comes to natural gas, Turkmenistan is a giant. According to BP Statistical Review of World Energy, Turkmenistan has the world’s fourth largest proven natural gas reserves, even higher than the US. Its share stands at 9.4% of the total proven gas reserves and is behind only Iran, Russia, and Qatar.
Due to abundance of natural gas, the commodity is a major source of revenue. But at the same time, the country’s fortunes move with the change in natural gas prices and the sharp decline in energy prices in general in the recent past has been the chief cause of the slowdown in the country’s economy.
According to the Asian Development Bank, Turkmenistan was growing at a breakneck speed of 14.7% in 2011, which slowed down to 6.5% in 2015 and to 6.2% in 2016.
The role of Russia
Russia was the chief buyer of Turkmen gas until 2010, according to an article by Russia Beyond The Headlines. An explosion in the Central Asia–Center gas pipeline in 2009 caused tensions between the two countries and from 2010 until 2015, Russia cut back its purchases from Turkmenistan to a fifth of its previous amount.
Then in 2016, Russia completely stopped purchasing gas from the country with Gazprom’s deputy chairman Alexander Medvedev saying in September 2016 that the country will not purchase gas from Turkmenistan until the end of 2018.
Then the country lost another customer in Iran. According to Reuters, Turkmenistan was shipping about 9 billion cubic meters of gas to Iran every year. On January 1, 2017, Turkmengas suspended its shipments to Iran on non-payment of dues.
While the National Iranian Gas Co. (NIGC) called the abrupt halt a violation of their agreement, the Turkmen Foreign Ministry questioned the intent of the NIGC to pay previous arrears.
These developments have left only one customer for Turkmen gas. Let’s look at that customer and how this dependence has impacted Turkmenistan in the next article.