Turkmenistan: laughing gas?

Gurbanguly Burdymukhammedov, a former dentist who became president of Turkmenistan in late-2006, may find himself popular at this week's NATO summit.

European and US officials may ask Burdymukhammedov to commit to a new pipeline route for gas. Moscow will be suspicious of the bonhomie –- the proposed route cuts Russia out of the equation.

Moscow has held the upper hand over Central Asia's coveted energy reserves for many years, for the simple reason that nearly all the pipelines run north, a legacy of the Soviet era. State energy behemoth Gazprom has profited richly by buying Turkmen gas on the cheap and selling it at a premium to European consumers. Yet the dynamics are changing:

• China inked an agreement to import 30 billion cubic metres of gas per year from Turkmenistan through a new, eastward pipeline due to come online in 2009.
• European states have pursued a westward route for Turkmen gas in order to diversify their gas supplies away from Russia, which meets about 40% of their needs. The United States has backed these efforts.

To stay in the game, Russia responded dramatically. On March 11, Gazprom announced that it would pay 'European prices' for Central Asian gas from January 2009. This could mean $350-400 per thousand cubic metres -- compared to around $180 at present and around $30 five years ago.

One more factor at play: nobody knows how much gas Turkmenistan actually has. Late dictator Saparmat Niyazov used figures in the 40-100 trillion cubic metre range, but BP thinks it is just a fraction of that figure: 2.9 trillion cubic metres. Ashgabat hired UK auditors Gaffney, Cline & Associates this month to study the reserves. When they come back with a number, Turkmenistan's suitors will know if they have been led up the garden path.