And so the saga of the Turkmen-Ukraine gas deal continues to plod on. This time round Ukraine’s Prime Minister Yuriy Yekhanurov is visiting Ashgabat in a bid to iron out the latest hitch. For those who haven’t been paying attention, Ukraine had signed an agreement with Turkmenistan to purchase 50-60 billion cubic metres of natural gas at the rate of $58 per 1,000 cubic metres, half being paid in foreign currency and half in equipment and commodities. The priced had been upped from an earlier $44, but the Ukrainians relented in January this year as they faced the prospect of a cold winter without fuel. Since then Ukraine has fallen short of their payments in commodities to the tune of $480 million, and Niyazov isn’t happy.
In light of the very recent reprivatisation of their flagship steel plant Kryvorizhstal for $4.8 billion, there is every reason to believe that Ukraine will be feeling a bit flush. Does this mean that the capricious Turkmens will get their way yet again? Given Yushchenko’s current problems, there is every reason to believe they will.
In the broader perspective, this marks another victory for Turkmenistan’s crude energy diplomacy, which consists primarily of threatening to switch the tap off every few months. The bluff failed some months ago with Russia, which is a decidedly tougher and better-resourced opponent, as Mosnews reported some months back:

Russia and Turkmenistan reached an agreement to resume deliveries of Turkmen natural gas to Russia’s Gazprom from May 1. Gazprom was able to convince its Turkmen counterparts to sell the gas for $44 per 1,000 cubic meters instead of the $58 initially demanded. In return Turkmenistan cut its supplies from seven to four billion cubic meters.

Naturally, Russia is a pretty vital piece of the jigsaw, so Kiev may have been annoyed, if unsurprised, when Niyazov proposed three-way talks during his talks with Yekhanurov. A statement from Yekhanurov after a meeting with Turkmenbashi is a tantalising suggestion of the behind-the-scenes strategy games that are currently being played between Kiev, Moscow and Ashgabat:

“I think this question too should be taken into consideration. We’ll see. … [On an agreement for a 25-year delivery deal] It is indeed fundamental that we discuss matter in a tri-lateral format. … It is difficult to speak today about a 25-year contract, insofar as such long-term matter need to be assessed in the context of a process of dialogue with Russia.”

Keen watchers of Central Asian developments will remember the recent visit to Turkmenistan by Russian Foreign Minister Sergei Lavrov, and it would not be too extravagant a supposition to conclude that the tri-lateral idea was raised at that time. Bargaining over Turkmen gas has had Ukraine and Russia on a collision course for quite a while, especially as there is no shortage of industry specialists who believe that Turkmenistan does not even have sufficient gas reserves to supply both these customers.
As the pieces stand now, Russia looks to be sinking its claws back into Ukraine, whose political future depends on gas it can barely afford, while Turkmenistan retains its neutrality policy unsullied. Again it should be recalled that while Ukraine uses most of the imports for domestic consumption, Russia merely uses it as a geopolitical pawn that enables it to sell gas to Europe at enormous profit. Ukraine’s despair and diplomatic proximity to an EU that is energy-hungry and prepared to spread further east would seem to make it a better bet, but it would seem safer to believe that Ashgabat is more reliant on Russia’s discretion about its eccentric political order.
As always, though it is tempting to glaze over yet more dull gas stories in Turkmenistan, there is ample reason to pay attention, especially when the ultimate outcome has very real implications for the West.
A final factor to consider is that Turkmenbashi may be feeling particularly benevolent as he basks in the pleasantries of Independence Day celebrations on 27 October. Already he has pledged to release 8,000 prisoners as part of the goings on (not including the political prisoners one assumes), so who knows whether he might be in a magnanimous frame of mind.