As the country with the fourth largest natural gas reserves in the world, Turkmenistan is aiming to diversify its energy export routes in order to enhance its strategic role as an energy supplier. In 2015, this central Asian republic paved the way for the implementation of the eastward and westward export corridors, starting the completion of the TAPI pipeline and completing the national East-West gas pipeline.

Even while Turkmenistan confirmed its twenty-year adherence to permanent neutrality in its foreign policy, in the year under review President Gurbanguly Berdimuhamedow faced growing and dangerous threats along the Turkmen-Afghan border, represented by potential incursions of the Afghan Taliban or other armed groups, which could affect both Turkmenistan’s national stability and its domestic security. In this situation, and considering that Turkmenistan’s armed forces may not be ready to face this challenge along the eastern border, President Berdimuhamedow, in the year under review, reiterated Turkmenistan’s refusal to cooperate with Russia in the Collective Security Treaty Organization (CSTO) framework. However, unconfirmed reports have suggested that Uzbek and Russian military units have already been engaged along the Turkmen-Afghan border, reinforcing Turkmenistan’s border defence capacity. Likewise, according to some sources, military cooperation between Turkmenistan and the US appear to be in the offing.

1. Introduction

During 2015 Turkmenistan has been profoundly worried about the growing activism of armed militants along its eastern border, which it shares with Afghanistan. The potential convergence between Central Asian terrorists – mainly the Afghan Taliban and the Islamic Movement of Uzbekistan – and foreign fighters linked to the so-called Islamic State represent a dangerous threat to national stability and domestic security, not only with respect to the preservation of the current political leadership but also with respect to the future implementation of the eastward corridor for energy exports. As a matter of fact, the completion of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline (from Turkmenistan to India and Pakistan, crossing Afghanistan) has progressively become a strategic goal in the Turkmen strategy of diversifying energy exports in order to lessen the dependence on gas exports delivered to China.

On 12 December 2015, Turkmenistan celebrated the 20th anniversary of permanent neutrality, based on a peaceful and non-alignment position in foreign policy. However, if the Taliban threat along the border becomes more relevant, Turkmen President Gurbanguly Berdimuhamedow will be pushed to revise the traditional neutrality concept in foreign policy in order to receive the military support needed to contain the destabilizing armed incursions of terrorists.

With respect to the diversification of its energy exports, Turkmenistan took concrete steps, starting the completion of the TAPI pipeline and mainly reaffirming its commitment to supplying the Southern Gas Corridor. As a matter of fact, in addition to the Ashgabat Declaration signed in May 2015, Turkmenistan completed the East-West gas pipeline, which is meant to fuel the future westward export route to the EU markets.

2. The domestic political scenario

Since 2012 Turkmenistan has progressively undertaken a gradual process of democratization and reforms, in order to change the national political system from a one-party system – based on the presidential Democratic Party – to a multi-party political system: currently the Party of Industrialists and Entrepreneurs and the Agrarian Party of Turkmenistan – which were founded in 2012 and 2014 respectively – are the other official political parties in the country.

Nevertheless, Turkmenistan remains an authoritarian state: President Berdimuhamedow is also the head of government and the commander in chief of the armed forces. According to the Turkmen leadership, an immediate adherence to the democratic experiences of other states would be inappropriate for Turkmenistan, while a gradual approach to the democratisation could better ensure that political and socio-economic reforms are consistent with “the centuries-old democratic traditions”.[1]

The role of the Council of Elders – a consultative assembly of elders from all provinces of Turkmenistan assisting the president in addressing issues of state importance – and of the Gengesh – the local self-government bodies – reflect the Turkmen’s willingness to respect the national traditions and to undertake an endogenous approach towards democracy.

During the last session of the Council of Elders, one of the debated issues was the worsening of the economic outlook, due to falling global energy prices, which has severely affected the Turkmen economy, which is heavily reliant on natural gas exports. The Council of Elders proposed abolishing the free supply of electricity, cooking gas, and water to the country’s households, so as to reduce welfare benefits – introduced by the former President Niyazov in 1993 –, which contribute to ensuring domestic stability.[2]

Moreover, in January 2015 Turkmenistan devalued its national currency, the Manat, in order to bolster its effort to diversify its trade’s.[3]

Following the negative shortcomings in the energy, economic and security spheres, Turkmenistan’s President made reshuffled his government, changing the staff in the government’s senior posts.

In August 2015, the Deputy Prime Minister Durdylyyev was dismissed, as was the Minister of Energy, Geldi Saryev, because of shortcomings in their work, while Dovranmammed Rejepow was appointed as the new Minister of Energy.[4] As we observe in the next sections, Turkmenistan’s success in the energy sector arrived only in December 2015, following the completion of the East-West gas pipeline and the beginning of the realization of the TAPI gas pipeline (Turkmenistan-Afghanistan-Pakistan-India).

Furthermore, the growing threats to national security, due to Taliban activities along the Turkmen-Afghan border pushed the Turkmen President to dismiss Begench Gundogdiyev from the post of Defence minister: Yaylim Berdiev – the former minister of national security – became the new Defence minister, while Guychgeldi Hojaberdiev was appointed Turkmenistan’s minister of national security.[5]

3. Threats to national security at the eastern border

During 2015, the Turkmen authorities have dealt with a worsening security outlook along the eastern border, which is shared with Afghanistan, following the consolidation of tbe Taliban’s position in the Afghan districts close to the Turkmen border. After the Taliban took control of Khamyab province in December 2014, they extended their control over Faryab province in Afghanistan. Frequent clashes and military incursions have been reported, even if they diminished compared to 2014.

Considering that, according to two of the main experts on Central Asian security, the Afghan government does not have the military force to restore security in its western provinces, the rise of Taliban activism represents a serious challenge for Ashgabat.[6]

In terms of trans-border stability, the situation is further complicated by the presence of an estimated 1.5 million ethnic Turkmens in the northern Afghan provinces of Faryab and Jowzjan, just beside the border with Turkmenistan. In these Afghan border provinces, where the Taliban are firmly entrenched, the local Turkmen community have organized a kind of popular militia – led by Gurbandurdy and Emir Karyad, two former ethnic Turkmen warlords – which, in 2014 and 2015, fought against the Taliban to protect the local Turkmen.[7]

This being the situation, Turkmen border guards – worried about the Taliban threat – in order to prevent incursions by the Taliban have closed the border, installing obstructive barb wire along the border. This move has adversely affected the ethnic Turkmens on the Afghan side, depriving them of vital grazing pastures that are located on the Turkmen side of the border and which Afghan Turkmens traditionally had access to in the past.[8]

In addition to the Taliban threat, the rising presence of Central Asian foreign fighters linked to the Islamic State (IS) is another looming challenge facing Turkmenistan. According to the International Crisis Group the number of Central Asian jihadists – which are active in Iraq and Syria under the banner of the IS – is between 2,000 and 4,000. However, estimates vary, mainly because Central Asian governments often overestimate the number of terrorists for internal political reasons, in order to tighten domestic social control.[9]

Russia also appears to overestimate the presence of IS fighters in Central Asia, putting the number of IS fighters along the Turkmen-Afghan border at 2,500, in an ill-disguised attempt to pressure Ashgabat to establish military cooperation with Russia within the CSTO framework (the Collective Security Treaty Organization, the main regional security organization leaded by Russia, which also includes Kazakhstan, Tajikistan, Kyrgyzstan, Armenia and Belarus).[10]

The future possible return to their homelands of the Central Asian fighters now active in Syria and Iraq represents a big potential challenge for the Turkmen and other Central Asian authorities. This threat appears to be a serious one, particularly after the IS’s announcement that it intended to create a Khorasan vilayat (province) of the Caliphate, including Turkmenistan, Central Asia and Iran. It is a fact that the number of Turkmen IS fighters seems not to be so high – less than 400, much less than their Uzbek or Tajik counterparts. However, a potential merger between the IS and regional Islamic extremist movements is clearly perceived as a destabilizing and dangerous threat. Indeed, in August 2015 the leader of the Islamic Movement of Uzbekistan – IMU, which represents the most powerful and rooted Islamic movement in Central Asia – pledged its allegiance to the IS.[11]

This being the situation, President Berdimuhamedow has discussed with the President of Uzbekistan, Islam Karimov, in Tashkent, the worsening regional security outlook and how to address the threats coming from Afghanistan.[12]

Turkmenistan has always adopted a pragmatic approach toward Afghanistan, offering economic solutions to Afghanistan’s problems and attempting to integrate the country within a regional economy through the development of trade and energy infrastructures (natural gas and electricity networks).[13]

Part of the Ashgabat-sponsored economic solution to the Afghan woes is the completion of the TAPI gas pipeline (on which, more below). Indeed, the completion of TAPI will make available to Afghanistan both the supply of Turkmen natural gas, lucrative transit fees and revenues (estimated at 500.000-$1 billion per year) and, last but not least, the building of infrastructure and the creation of new jobs.[14]

Turkmenistan concretely supports Afghanistan’s development, by supplying electric power and liquefied petroleum gas at preferential prices, building industrial facilities and sending humanitarian aid. In 2015 the Turkmen President announced the objective of increasing fivefold the electricity supply to Afghanistan, following the expected completion of the new gas turbine power plants in the regions of Lebap and Mary.[15]

In November 2015, Turkmenistan concluded the national section of the Turkmenistan-Afghanistan-Tajikistan railway, from Atamyrat to Akina along the border with Afghanistan. In the future this trans-regional railroad corridor will play a significant role in integrating Afghanistan in the regional markets, increasing trade turnover and becoming an important link in the transport network, integrating the countries of Central Asia and easing access to the seaports on the coast of the Indian Ocean.[16]

4. 4. Revising the Turkmen neutrality policy?

Turkmenistan’s ambitious aim is to promote peace and stability in Afghanistan through preventive diplomacy, and the Ashgabat government has proposed hosting an inter-Afghan peaceful dialogue under UN auspices, as a new political and diplomatic mechanism for resolving this issue.[17] Nevertheless, in security terms, Turkmenistan has boosted its border defences, in order to monitor and patrol the 257 km largely deserted border with Afghanistan. In October 2015, nearly 70% of Turkmenistan’s land military forces were deployed in the southern parts of the provinces of Mary and Lebap, both of which border Afghanistan, which highlights the extent to which the national government is worried about the security on its eastern border.[18]

However, Turkmenistan’s armed forces may not be ready to face the challenge of frequent terrorist incursions from the eastern border, which could destabilize the country and represents a serious threat to its national security.

According to the Stockholm International Peace Research Institute (SIPRI) Turkmenistan’s armed forces are considered among the weakest in the region, due to several factors such as the lack of personnel training and as a result of the neutrality policy. As a matter of fact, the Turkmen army did not undertake any military operations and were not involved in any multilateral training exercises as a consequence of Turkmenistan’s refusal to participate in some regional military-political blocs. Normally, 12,000 border guards are deployed along the Afghan-Turkmen border but these guards are considered ineffective due to the lack of qualified personnel.[19]

During a meeting of the State Security Council, President Berdimuhamedow – who is also Supreme Commander-in-Chief of the Armed Forces General of the Army – reaffirmed his engagement in the implementation of a large-scale military reform, based on upgrading the hardware used by the armed forces and training qualified personnel.[20]

If the Taliban threat along the border becomes more urgent, President Berdimuhamedow could be pushed to revise the neutrality concept in foreign policy in order to receive the military support needed to contain armed incursions by the Taliban.[21]

On 12 December 2015 Turkmenistan celebrated the 20th anniversary of permanent neutrality, which is internationally recognized given the fact that in 1995 the United Nations General Assembly unanimously adopted the Resolution on the Permanent Neutrality of Turkmenistan.

During his speech at the International Conference on the Policy of Neutrality held in Ashgabat, President Berdimuhamedow stressed the strategic relevance of positive neutrality, as a model based on peacefulness, non-interference in the affairs of other states, respect for their sovereignty and territorial integrity, and non-participation in international military organisations and treaties.[22]

Moreover, considering that Berdimuhamedow stated that «this status is a pillar to peace, security and development», and that «the promotion of fraternal and friendly relations with our neighbours will remain a crucial aspect of the foreign policy of neutral Turkmenistan», Turkmenistan appears officially determined to preserve its neutrality policy.[23]

As a matter of fact, in spite of several talks between Turkmenistan’s and Russia’s presidents about the security concerns and the threats coming from Afghanistan, Turkmenistan has to this day refused to cooperate with Russia in the CSTO framework, disappointing CSTO Secretary General Nikolay Bordyuzha.[24]

Nevertheless, unconfirmed reports have suggested that Uzbek and Russian military units are already engaged along the Turkmen-Afghan border in order to reinforce the border defence capacity of Turkmenistan. Likewise, according to some sources, potential future cooperation between Ashgabat and Washington to achieve the same security aim seems to be in the offing, even if the Turkmen government has not officially confirmed this.[25]

5. 5. The strategic energy partnership with China and the diversification of export routes

Turkmenistan ranks fourth in the world in terms of the volume of its natural gas reserves, after Iran, Russia and Qatar. According to the BP Statistical Review 2015, Turkmenistan holds 17.2 trillion cubic meters (tcm) of natural gas reserves, even if the estimates of the Turkmen authorities are higher.[26] As a matter of fact, according to an independent audit, the reserves of the Galkynysh field – the world’s second largest in terms of reserves – together with the Yashlar deposits, are estimated at 26.2 tcm. In November 2015, during the international exhibition and conference «Oil and Gas of Turkmenistan», the country’s minister for oil and mineral resources, Muhametnur Halylov, stated that the reserves of this giant gas deposit will rise to 27.4 tcm when we add the reserves of the newly discovered Garakel field, which is included in the Galkynysh area.[27]

The national production of natural gas increased by 11% in 2014 (from 62.3 bcm[28] to 69.3 bcm); Turkmenistan exported 41.6 bcm of gas to the countries of China (25.5 bcm), Iran (6.5 bcm) and Russia (9 bcm).[29] Under the program for the development of the country’s oil and gas industry, the plan is to increase the gas production volume to 230 bcm by 2030.

In spite of these positive prospects in the gas sector, the need to diversify the export energy routes has suddenly become urgent, and not only to balance the rising Chinese influence in the national energy sector. As a matter of fact, in 2015, the Turkmen authorities clearly realized that Russia cannot be considered a reliable energy partner. In February 2015, Alexander Medvedev – the Gazprom Vice Chairman – revealed that Gazprom would be cutting more than 50% of its natural gas imports from Turkmenistan, from 10 bcm (2014) to 4 bcm in 2015.[30] This planned reduction of exports to Russia will affect the national energy budget. This is despite the fact that Russia signed an agreement with respect to gas supplies with Turkmenistan for 25 years in 2003 and that in 2008 Russia purchased 42 bcm of Turkmen gas. Moreover, the Turkmen authorities claim that Gazprom has not yet paid gas volumes bought in 2015.

At present Ashgabat has lost an energy partner that should be promptly replaced in order to implement the strategy of diversifying the export routes as well as selling the increased production that is expected over the next few years.

When the Turkmen government launched its strategy of export diversification, the main aim was to lessen the dependence on exports to Russia, finding new partners and opening new export routes: now Turkmenistan is in a similar situation with China, which has taken over Russia’s role.

China currently is the main energy partner for Turkmenistan in terms of exports (25.5 bcm in 2014, 60% of total gas exports) and the main investor in the development of the Turkmenistan gas fields. In addition to the development of the first and second phases of the giant Galkynish gas field, China National Petroleum Corporation (CNPC) is also developing Turkmenistan’s Bagtyyarlyk gas field on the bank of the Amu Darya, and investing billions of dollars in the Turkmen energy sector. After the completion of Line C at the end of 2015, the China-Central Asia Gas Pipeline will have a capacity of 55 bcm, while the construction of a new gas pipeline from Turkmenistan to China (Line D) with the capacity to carry 30 bcm/a of gas will start in 2016. Under the agreement signed between the CNPC and Turkmengaz, Turkmenistan will supply China annually with 65 bcm of gas by 2020-2021.[31]

In the next decade this unbalanced dependence on Chinese markets could severely affect Turkmenistan’s energy security. As a matter of fact, following the implementation of the Sino-Russian energy deal – based on the completion of the Power of Siberia gas pipeline (and potentially Altai gas pipeline) – China could decide to buy more Russian gas, reducing Turkmenistan’s gas supply and consequently exposing the Central Asian country to a condition of vulnerability, even if at present China buys Turkmen gas at a lower price than Russian gas.

This scenario is pushing President Berdimuhamedow to immediately find new and alternative energy partners, accelerating the implementation of the western and eastern vectors of export.[32]

5.1.   Turkmenistan and the Trans Caspian Pipeline: a concrete engagement

In 2015, Ashgabat took significant steps towards the completion of the Trans Caspian Pipeline (TCP), the energy corridor along the Caspian Sea between Turkmenistan and Azerbaijan, with the concrete involvement of Turkmenistan as gas the supplier, in order to enhance the capacity of this energy route.

Trilateral negotiations among the EU, Turkmenistan and Azerbaijan have paved the way for improved reciprocal relations, which have tried to address unsolved issues between Baku and Ashgabat (i.e. the ownership of disputed offshore oil and gas fields in the Caspian basin), and the recent trilateral dialogue involving Turkmenistan and Azerbaijan and Turkey have revitalized the Trans Caspian project, producing interesting results. As a matter of fact, in November 2014 Turkmenistan signed a framework agreement with Turkey to supply the Trans Anatolian Natural Gas Pipeline project (TANAP), a section of the Southern Gas Corridor (SGC) project, which aims to deliver 16 bcm of gas a year from Azerbaijan’s Shah Deniz II field in the Caspian Sea to Europe via Turkey.[33]

In January 2015, during a trilateral meeting held in Ashgabat these three countries decided to further enhance their energy cooperation and the ministers of Turkey and Azerbaijan invited Turkmenistan to join the TANAP project.[34] Turkmenistan’s participation will enhance the capacity of this energy route – which is expected to reach 31 bcm in 2026 and 60 bcm in 2030 – allowing Turkmenistan to successfully exploit an alternative energy corridor with a large capacity, bound to conspicuously enhance the growth of Turkmenistan gas production and exports.[35] On 4 March 2015, the Turkmen Presidents visited Ankara, where Turkish President Recep Tayyip Erdogan announced the project to develop a trilateral mechanism on energy issues involving the two Caspian countries and Turkey.[36]

Furthermore, the trilateral meeting involving Turkmenistan and the EU and Azerbaijan (the so-called Troika) has produced a relevant agreement in the energy issues, in light of the shared convergence of strategic interests and concerns of the actors involved.

For the European Union, the worsening relations with Russia have further highlighted the vulnerability of its energy security and the need to coherently undertake a diversification strategy with respect to import routes, aiming to lessen the «unbalanced» reliance on Russian gas imports crossing Ukraine. For Azerbaijan, the Turkish Stream pipeline project – a new gas pipeline backed by Moscow crossing Turkey and carrying Russian gas – could undermine Baku’s exclusive role as EU’s alternative supplier along a southern route bypassing Ukraine.[37] Furthermore, the SGC expected capacity will reach approximately 30 bcm of gas per year – without the contribution of Turkmen gas – representing less than half of the Turkish Stream’s potential capacity (63 bcm per year). Consequently, Azerbaijan could strategically support Turkmenistan’s participation in the SGC. For Turkmenistan, a western corridor of gas exports would allow Turkmenistan to diversify its energy routes, lessening the strong dependence on a single customer – China, which currently purchases over 60% of Turkmen gas exports – and offsetting the Russian decision to cut its gas imports from Turkmenistan by nearly two-thirds.

The EU’s diplomatic engagement has produced significant concrete steps. In February 2015, Maros Sefcovic, the European Commission’s Vice President in charge of Energy Union, declared that the EU intends to find a technical and legal basis for the Turkmen gas supply via Azerbaijan, mainly because the EU Commission considers the TCP as a project of common interest.[38]

On 1th May, during a meeting of the energy ministers of Azerbaijan, Turkey, Turkmenistan, and EU representatives in Ashgabat, the parties signed the «Ashgabat Declaration», focused on the development of cooperation in the energy field.[39] The document said that the sides support the creation of the favourable conditions necessary for ensuring reliable, stable and long-term international energy cooperation, taking into account the interests of producers, transit countries, and consumers of energy resources. The sides also recognized the importance of equal and mutually beneficial cooperation in ensuring the supply of natural gas from Turkmenistan to Europe.[40]

In July, the first high level meeting of the Working Group on the TCP project was held in Brussels, involving the deputy ministers in charge of the energy section in the four countries involved in order to consider all aspects (organizational, legal, commercial, technical) related to implementing a natural gas corridor from Turkmenistan to Europe.[41]

Furthermore, in December 2015 Turkmenistan concluded the East-West pipeline, a 773-kilometer gas pipeline with a capacity of 30 bcm of natural gas per year that connects Galkynysh’s largest gas field with the Shatlyk gas compressor station in the province of Mary and the Belek gas compressor station in the Balkan province. In order to enhance its capacity to 40 bcm the Turkmen authorities plan to add 10 bcm provided by Malaysian Petronas, operating at Turkmenistan’s offshore block. The fact that the whole pipeline has been built by national energy companies – Turkmengaz and Turkmennebitgazgurlushyk – and that the $2 billion estimated cost has been covered by the Turkmen governments shows the strategic relevance of this corridor to the national strategy of energy export diversification.[42]

5.2.   Geopolitical hindrances and alternative projects

Turkmenistan has clearly reaffirmed its commitment to developing the SGC, concretely opening a new and alternative westward route of energy export and potentially playing the role of a gas supplier to the EU. However, this ambition could be hampered by some domestic and international hindrances, such as the dilemma concerning the Iranian corridor and the persistent Russian opposition to the realization of TCP.

According to Sefcovic there are two potential routes for exporting Turkmen gas to the EU market: transiting through Iran, and building an underwater Trans Caspian pipeline.[43] Following the improvement of EU-Iranian relations, the possibility of an an overland pipeline delivering Turkmen gas through Iranian territory to Turkey could be an interesting alternative option to pursue, in order to reach the EU market.

However, it will be necessary to build infrastructure in order to realize this Turkmen-Iranian energy corridor: the current capacity of the Turkmen-Iranian gas pipeline is 18 bcm, so it would need to be expanded to carry additional volumes of Turkmen gas to boost TANAP’s capacity. Moreover, Iran should improve its domestic energy infrastructure in order to connect it to the Turkish border.[44]

Russian opposition to the realization of a Trans-Caspian pipeline is officially motivated by ecological and environmental issues, even if we can also observe geopolitical reasons in Moscow’s approach, aimed at preventing the implementation of an alternative export energy route to the EU markets, which could lessen the EU’s dependence on Russian gas imports. Moreover, the unsolved legal status of the Caspian Sea contributes to delay a potential solution with respect to the TCP.

The official position of Ashgabat regarding the project is that the consent of the countries whose territories are involved in the project is enough to build a pipeline. In spite of the recent enhanced rapprochement with Azerbaijan on energy issues – which also shared with Turkmenistan the same approach about the TCP – the next Caspian summit scheduled in 2016 could be decisive in reaching a definition of the Caspian sea’s legal status and both countries will postpone any decision concerning the Russian position during the summit.

At the same time, the agreement between Turkmenistan and Kazakhstan for the delimitation of the shared Caspian Sea bed signed in 2015 showed Ashgabat’s willingness to develop a cooperative approach with respect to regional energy issues, enhancing bilateral relations with post soviet energy producers with the aim of improving the legal framework before the Caspian summit.[45]

Considering that the bulk of national reserves are located onshore in the eastern region, Turkmenistan needs to exploit the potential Caspian reserves – which are largely unexplored – in order to enhance the western vector of its energy exports. Ashgabat invited foreign companies to sign production sharing agreements (PSA) to develop hydrocarbon resources in the Turkmen part of the Caspian Sea, which are estimated at 12 billion metric tons of oil and 6.5 trillion cubic meters of gas. Currently several foreign companies – such as Malaysia’s Petronas, Dragon Oil, Italy’s Eni, Russia’s Itera and Zarubezhneft Cyprus-based Buried Hill – are seeking to develop the Turkmen offshore energy potential.[46]

In spite of positive diplomatic steps, given the current outlook, Sefcovic’s statement that Turkmen natural gas could start being exported to Europe through a pipeline under the Caspian Sea by 2019 appears optimistic. In spite of several hindrances, which have been delaying the TCP’s realization, the potential participation of Turkmenistan in the AGRI project could allow the implementation of the Southern Gas Corridor – as well as of a westward export route – without building an underwater pipeline, also overcoming Russian claims.

AGRI will be designed to transport Azerbaijani gas by pipeline – with a planned capacity of 7 bcm that should thereafter be upgraded to 20 bcm – to a Black Sea port in Georgia for liquefaction and then this LNG will be delivered via tanker to the Romanian Black Sea port of Constanta before reaching Eastern European markets.[47]

If the AGRI system’s capacity is increased, it could potentially accommodate LNG exports from Turkmenistan, through the ad hoc facilities in Turkmenbashi International Seaport. The AGRI project clearly represents an interesting diversification option for Ashgabat, even if the fate of this interconnector is strictly interlinked to several economic and geopolitical hindrances which could delay its completion.[48]

Turkmenistan’s contribution to the development of an East-West corridor is growingly significantly with respect to the oil sector, considering that Turkmen oil transportation through the Baku-Tbilisi-Ceyhan pipeline increased by nearly 40% in 2015. The BTC pipeline mainly delivers Azerbaijani oil to the Western markets but also Kazakhstan and Turkmenistan oil exports by tankers to the Baku port. In 2014, BTC transported 5.6 million metric tons of Turkmen oil, compared to 3.3 million metric tons in 2013.[49] At present, the country produces around 10 million metric tons of oil per year, but in 2015 Turkmenistan increased oil production (+6.5%) partly thanks to the activities of foreign energy companies – mainly Dragon oil and Malaysian Petronas – involved in the development of the Turkmen sector of the Caspian Sea under the production sharing agreements.[50]

5.3.   The launch of the Turkmenistan-Afghanistan-Pakistan-India pipeline

Concerning the eastern energy export corridor, in 2015 Turkmenistan started to build the TAPI natural gas pipeline, overcoming the traditional hindrances. On 7 November 2015, Turkmenistan’s President signed a decree ordering the state companies Turkmengaz and Turkmengazneftstroi to design and to construct the national segment of the TAPI, to be completed in two years.[51]

On 13 December 2015, the President of Turkmenistan Gurbanguly Berdimuhamedow, the President of the Islamic Republic of Afghanistan Mohammad Ashraf Ghani, the Prime Minister of the Islamic Republic of Pakistan Muhammad Nawaz Sharif, and the Vice President of India Mohammad Hamid Ansari gathered in the city of Mary to attend the ground-breaking ceremony of the TAPI gas pipeline.[52]

Through TAPI, Ashgabat will be able to sell 33 bcm of natural gas per year, through a pipeline with a length of 1,800 kilometres, which will cross Afghanistan and Pakistan before reaching India, with an expected cost of $10 billion.

This relevant success has been made possible by the previous realization of some necessary preconditions. Firstly, the TAPI Ltd. International consortium – established in November 2014 and composed pf Turkmengaz State Concern, Afghan Gas Corporation, Pakistan’s «Inter State Gas Systems (Private) Limited» and Indian «GAIL (India)» – selected the Turkmen national energy company Turkmengaz as the leader of this consortium and also the main investor. As a leader, the Turkmengaz State Concern will supervise the interaction concerning the construction, financing, ownership and operation of the pipeline.[53]

Secondly, in September 2015, the feasibility study for a project to construct the TAPI gas pipeline was completed. The British company Penspen was involved in the feasibility study for the TAPI. According to the Asian Development Bank (ADB), which is a transaction advisor on the TAPI project, this pipeline will be realized by 2018. Moreover ADB is one of the main investors and it will try to attract other international actors interested investing and financing the project.[54]

Thirdly, Turkmenistan has signed a framework agreement with a consortium of several Japanese companies for the development of the third phase of the Galkynysh gas field, which will be the main source fueling the TAPI project.[55]

So Japan has entered the geopolitical energy game in Central Asia, because the agreement on Galkynish is a real challenge to the current position of China, which holds contracts to develop the first and the second phase of the project. Japanese Prime Minister Shinzo Abe visited Turkmenistan in October 2015, where he concluded bilateral agreements on the construction of a gas and chemical plant, power plant and other projects for worth a total of $18 billion.[56] Tokyo’s government has offered investments to construct industrial plants based on advanced technologies for gas processing meant for the production of gasoline, polypropylene, polyethylene, caustic soda and other gas-chemical products. Construction also continues to progress on a gas chemical complex in Turkmenbashi that will to produce ethylene, high-density polyethylene, and polypropylene.[57]

In spite of Turkmen claims that it will complete the infrastructure by December 2018, the rising threats to regional security and stability appear likely to delay the implementation of this export corridor which is currently vital for the national strategy of diversification. Firstly, the TAPI route will cross areas affected by a great instability such as South-Western Afghanistan (Herat, Helmand, Kandahar) and Pakistani Baluchistan. Secondly, the growing confrontation along the Turkmen-Afghan border between Islamic extremists (Taliban, foreign fighters linked to the IS or IMU) and Turkmen border guards could contribute spreading instability (even if this area is currently a long way from the northern areas involved in the unrest), representing a threat to regularly supply energy delivered through TAPI.[58]

In addition to increasing exports of oil and gas, Turkmenistan also aims to diversify its national energy strategy and exports, developing projects to expand natural gas processing and petrochemical production. Turkmenistan plans to complete a plant for polyethylene and polypropylene production in Balkan province, as well as a plant for producing synthetic gasoline from natural gas in Ahal province in the next few years.

The recent energy cooperation with Japan could help Turkmenistan to develop its national industrial sector. Another interesting opportunity to diversify the national energy strategy is based on the industrial development and commercial exploitation of more than 200 deposits of various solid minerals and hydro-mineral raw materials. According to the Turkmen government, recent geological explorations have showed the presence in the national subsoil of relevant reserves of various mineral salts – such as sodium, potassium, sulfate and magnesium salts – as well as potential reserves of metals[59] such as manganese, copper, iron, lead, zinc, gold.[60]