A British NGO, Global Witness, has recently published a report (pdf format) about the Ukrainian-Turkmen gas trade. Among the accusations contained in the report is the fact that President Saparmurat Niyazov has keeping earnings from natural gas sales under his own personal control in overseas and off-budget accounts.
In support of this charge, Global Witness cited the decline in the standards of heath care and education as an indication of the fact that the money has misappropriated. As Global Witness campaigner Diarmid O’Sullivan told IRIN on Tuesday:

“The country’s income is mainly from gas revenues, but is not spent on the people. It’s funded overseas under Niyazov’s effective control so he can fund his personal cult with prestigious projects or reinvest in the gas industry. It’s off-budget funding and it’s only for political purposes.”

Global Witness claims to have reliable evidence that money under Niyazov’s control and held overseas ay be in excess of $3 billion, of which $2 billion is situated in the Foreign Exchange Reserve Fund at Deutsche Bank in Germany. The report states that:

“Global Witness has discovered that, according to a 2001 contract, gas revenues from 2002 to 2006 were intended to be paid into Central Bank of Turkmenistan account no. 949924500 at Deutsche Bank, Frankfurt, but little else can be determined about exactly how Niyazov is managing Turkmenistan’s money. Most worrying of all, it seems that no money from the sale of Turkmen gas even makes it into the national budget.”

The report also dwells upon the role of RosUkrEnergo, a gas trading firm that deals with the sale of Turkmen gas to Ukraine. RosUkrEnergo has recently been exposed to substantial press converage after it was revealed that the hitherto unknown owners of 50 percent of the company have been revealed as Dmytro Firtash and Ivan Fursin. What follows is a passage from a recent feature on Firtash that appeared in the Financial Times (subscription required):

“Dmytro Firtash, the Ukrainian trader who has emerged as a key player in the European natural gas market, was unfamiliar to most western business people until this week. But a small group of British businessmen have known him well for years.
When he appeared last year at a Mansion House dinner at which the Queen presented an award to Ukrainian President Viktor Yushchenko, the 40-year-old Mr Firtash sat at a table hosted not by Ukrainians, but by JKX Oil and Gas, a British AIM-quoted company with interests in Ukraine. Its chairman is Lord Peter Fraser, a former Tory trade minister, and the chief executive is Paul Davies, an oil man with extensive experience in the former Soviet Union. Mr Firtash is one of the company’s biggest shareholders, controlling a 9.7 per cent stake through a holding company called Benam.
Few people beyond JKX’s immediate circle were aware of Mr Firtash’s significance. This week he was identified as a key shareholder in RosUkrEnergo, a trading company bringing gas from central Asia to Europe.”

In other gas related news, Niyazov has signed a decree appointing Bagtyyar Hajygurbanov as the chairman of Turkmengas. According to a Times of Central Asia report, Hajygurbanov, 36, previously worked as first deputy chairman of Turkmenneft state oil firm. Allamyrad Ovezov, the previous chief of Turkmengas, was sacked in early November last year and later prosecuted for abuse of position and corruption. Niyazov also named Annaguly Deryaev as the new deputy chairman of Turkmenneft.
In a comment piece on his News Central Asia website, Tariq Saeedi carries news of the appointment of Sapargeldy Jumaev as the new head of Turkmengeologia. Saeedi comments in some detail on the content of a Cabinet meeting that took place last Thursday. From the Cabinet meeting and the gas dealings of the last six months, Saeedi draws a number of conclusions:

- Turkmenistan is not in a hurry to dispose off its hydrocarbon resources at breakneck speed. There is realisation at the highest level that hydrocarbon resources are not renewable and while they last, the country should gain maximum possible benefit by selling them at the best possible price to the most reliable buyer. In order words, the country needs to prepare for the day when the subsoil hydrocarbon reserves come to an end.
- Contrary to the previous emphasis, the new policy gives equal importance to development of oil and gas resources. During the initial years of independence more attention was paid to gas and less to oil.
- Turkmenistan is now probably willing to reactivate some of the ideas that had been abandoned in the past because of various reasons.
- There is probably a growing consciousness that Russia will never budge from its odious practice of using Turkmen gas as a trump card in its ongoing spat with Ukraine. There is also likely subdued anger at being used as a pawn in Gazprom’s design on Europe.

The article also analyses the outcome of eventual gas deals with China, and how these are likely to affect trade with Ukraine and Russia. Saeedi’s piece is characteristically sympathetic to Turkmen government policy, but nonetheless features some interesting and revealing insights.