As Turkmenistan shakes off Niyazov's cult of personality and moves toward integration into the global economy, an accurate accounting of the country's natural gas assets is essential for attracting Western investment, as verified reserves serve as a valuable asset in attracting foreign capital. Among the companies seeking to perform this service for Turkmenistan was the U.S. company DeGolyer & MacNaughton, but Niyazov's successor, President Gurbanguly Berdymukhamedov, has now chosen the British firm Gaffney, Cline & Associates Ltd. to perform the country's first independent audit of its natural gas reserves.
"The first in the line of deposits to undergo the audits are Southern Yolotan (Iolatan) and Osman, which may be entered in the list of the Earth's largest in terms of the size of reserves," Berdymukhamedov said.
The news comes as a major disappointment to DeGolyer & MacNaughton, as it along with Gaffney had in 2003 participated in a three-year audit of gas reserves in central and eastern Turkmenistan. As a result of the audit, a year ago Ashgabat announced its Dauletabad natural gas field, the country's largest, had reserves of 4.5 trillion cu m. Dauletabad, which began production in 1983 and until 1991 was known as Sovietabad, had been estimated by Soviet geologists to contain 1.4 trillion cu m of reserves. The 2006 DeGolyer-Gaffney audit effectively tripled the estimates of Dauletabad's reserves, which for 15 years had been exported to Ukraine and Russia.
The massive Iolotan-Osman gas fields are Ashgabat's potential trump card in the global energy market. In November 2006 visiting German Foreign Minister Frank-Walter Steinmeier was told that the recently discovered Iolotan-Osman fields had potential reserves of 7 trillion cu m of gas, twice that of Russia's rival Shtokman field. Some specialists believe Iolotan-Osman will prove to be one of the world's four largest gas fields.
If the Gaffney audit verifies the claim, then Ashgabat's major problems boil down to choosing foreign companies to develop the deposit and determining which pipelines to build for future exports. Current routes under consideration include Nabucco, a trans-Afghan route, the Caspian littoral pipeline and a pipeline toward China. Ashgabat has already committed itself to the latter two.
Cynics might observe that Berdymukhamedov is simply dangling his country's assets in front of bidders to secure the best possible deal, an approach that is understandable when one remembers that a little more than two years ago, Gazprom, currently responsible for purchasing two-thirds of Turkmenistan's natural gas exports, was buying Turkmen gas at less than one-fourth its global market price. Unlike his predecessor Niyazov, Berdymukhamedov is well aware of both the global market and the need for diversification.
"With demand for fuel steadily growing the need arises to develop a more flexible approach to using our rich potential," he said. "Turkmenistan will be shaping its policy in line with national interests and the interests of its partner countries."
In this context, Berdymukhamedov advocates both a regional and broader international approach, telling foreign diplomats at a meeting earlier this month, "We attach great importance to further expansion of our cooperation with Iran, Uzbekistan, Kazakhstan, Azerbaijan, Afghanistan and our other neighbors. At the same time, Turkmenistan is planning to increase its fruitful and traditionally friendly contacts with Russia, China, the U.S. and the European Community countries."
In addition, Berdymukhamedov said Ashgabat will continue to develop its cooperation with international organizations such as the United Nations, the Organization for Security and Cooperation in Europe, the Organization of the Islamic Conference, the Economic Cooperation Organization and other international forums.
Ever the patriot, Berdymukhamedov's philosophy in developing the country's energy reserves is simple; he stated, "We should do our utmost to make the country's resources serve the nation."
All is not yet totally lost for plucky American wildcatters, however. Next month for the first time, Berdymukhamedov will participate in a NATO summit being held in Bucharest, Romania, on April 2-4. Last year Turkmenistan and NATO signed a bilateral partnership program and Berdymukhamedov held several meetings with NATO Secretary-General Jaap de Hoop Scheffer. The good news for U.S. energy companies is that America's "oil patch" chief executive, President Bush, will attend the summit.
Bush, however, will not be Turkmenistan's sole suitor, as Russian President Vladimir Putin will also be in attendance, along with Mikhail Saakashvili from Georgia, Ukrainian President Viktor Yushchenko, Azeri President Ilham Aliyev, Moldovan President Vladimir Voronin and Uzbek President Islam Karimov. In a world of record-high energy prices, there is little doubt that Berdymukhamedov will be the belle of the ball for compatriots from both the East and West.