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INDIA KEEN ON TURKMENISTAN NATURAL GAS

SARID, January 10, 2007

India is interested in Turkmenistan, the landlocked former Soviet Central Asian Republic. Since recognizing Turkmenistan in 1991 India has entered into several bilateral treaties and agreements with Afghanistan’s neighbor, including one on Investment Promotion and Protection and an MOU relating to air services operation between the two nations.

Turkmenistan is also one of the world's leading natural-gas producers, possessing proven reserves of 2 trillion cubic meters. The recent death of authoritarian President Saparmurat Niyazov, may result in other regional actors seeking to secure their interests in Turkmenistan. Indian energy analysts are urging their government to do the same so as to avoid being outrun in the energy race. India, which imports over 70 per cent of its oil and gas requirements, is currently over-dependent on the Persian Gulf states, and is keen to tap into Central Asian energy reserves.

Indian officials and entrepreneurs are especially eager to open the North-South Corridor - a proposed India-Iran-Russia trade and energy transport route through Central Asia – of which Turkmenistan is a signatory. Apart from energy gains, this region is a potential market for Indian heavy machinery, pharmaceuticals and tea. Indeed, these products comprised the majority of Indian exports ($31.45 million) to Turkmenistan during 2004.

India has also been expressing great interest in the proposed Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. Niyazov appeared to endorse the project, asserting, in November 2006, that South Asian energy demands could be met by additional gas reserves amounting to 7 trillion cubic meters. However, this claim remains to be proven. In the meantime, agreements signed by Turkmenistan in 2003 and 2006 to supply gas to Russia for 25 years and to China for 30 years respectively, may leave insufficient gas for either India or Pakistan.

Although TAPI is not an alternative to the Iran-Pakistan-India pipeline, it might be easier to implement as it has the support of the Asian Development Bank (ADB). Another alternative is to connect the TAPI pipeline with gas resources in Uzbekistan to improve its viability.

Turkmenistan produces roughly 60 billion cubic meters of natural gas each year and about two-thirds of its exports go to Russia's Gazprom. A protracted dispute between the two countries over the price ended in September 2006 when Gazprom agreed to pay 54% more.

Sources said that India will push for an energy dialogue with Russian president Vladimir Putin during his visit to participate in the country's Republic Day celebrations.

Natural gas, the cleanest of the currently available fossil fuels, is likely to keep its place as a major energy source with consumption growing at around 2.5% a year over the coming decades, analysts say.

The world has enough proven natural gas reserves to last 64 years at 2005 consumption levels, compared with only four decades worth of oil, according to the BP Statistical review.

Much of the world’s estimated 180tn cu m of gas reserves are deep under the sea, in vast deserts or politically unpredictable countries. Russia, Iran and Qatar account for 27%, 17% and 14% respectively and 58% of the total lies in former Soviet Union countries.

Sources: CIA World Factbook (https://www.cia.gov/cia/publications/factbook); British Petroleum (http://www.bp.com): India Post (http://www.indiapost.com)