In his article for CABAR leading Central Asian geopolitics expert Fabio Indeo analysed the dynamics of Turkmen-Turkish economic relations, the geopolitical significance of bilateral infrastructure projects, as well as the diplomacy behind the revival of the Trans Caspian energy project.
Turkey represents one of the main strategic pillars in the multi-vector foreign policy undertaken by the Turkmen President Gurbanguly Berdymuhamedov. Turkey appears to be one of the main economic and political partners for Turkmenistan in the international scenario. Turkmenistan and Turkey share cultural, historical, linguistic and religious ties that enhance the political relations and the bilateral cooperation.
In the political sphere, Turkey played a significant role since the independence of the post-soviet Turkmenistan, as the first country to recognize Turkmenistan’s independence in 1991 and to open its Embassy in Ashgabat: furthermore in 1995 Turkey strongly supported the permanent neutrality in foreign policy adopted by this Central Asian country under the former Turkmen President Saparmurat Niyazov.
Turkey contributed to establishing of the Turkmen national banking system. But still the bilateral economic relations appeared underdeveloped – mainly in the period 2001-2006 – because of the isolationist policy of Turkmenistan as well as for the negative experiences of some Turkish businessmen in the country.
Major Developments in Turkish-Turkmen Cooperation under Berdymuhamedov
President Berdymuhamedov has progressively undertaken a proactive foreign policy allowing the country to overcome the international isolationism. And Turkey became a strategic partner for Ashgabat: as a matter of fact, Turkey is currently the second largest trade partner for Turkmenistan, with more than 600 Turkish firms and companies operating in the country, while the bilateral trade turnover of this successful partnership exceeded US $6 billion in 2015.
Given its condition of political stability, Turkmenistan has been able to attract huge public and private investments, mainly in the construction’s sector: following a visit to Ashgabat in January 2012 Turkish Economy Minister Zafer Caglayan underlined the success of Turkish construction companies that were able to win up to 90% of government construction tenders in Turkmenistan.
Bilateral Infrastructure Projects and their Geopolitical Significance
In November 2014 during a meeting with Berdymuhamedov in Ashgabat Turkish President Recep Tayyip Erdogan highlighted the special cooperation between these two countries, and the contribution of Turkish companies to the infrastructural development of Turkmenistan. Turkish companies are engaged in Turkmen projects with an estimated worth of $42 billion. This high level political meeting was also the occasion to sign several agreements and memorandum of understanding to promote cooperation in trade and economy, transport, foreign policy, culture, education, energy.
The construction of the international seaport in the city of Turkmenbashi and the international airport in the capital Ashgabat represent two main infrastructural projects assigned to Turkish firms. Polimeks, Turkish leading construction company in Turkmenistan, signed a $2.2 billion contract in early 2013 to build a new modern airport in Ashgabat. Turkish Gap Insaat Company, owned by Calik Group, was designed as the general contractor for refurbishment and upgrading works of the Turkmenbashi port in the Caspian Sea, with an estimated cost of US $2 billion. It is expected to complete the project by the end of 2017.
The development of this Caspian port will have a strategic relevance. It is going to allow Turkmenistan to increase its energy and textile exports to Europe, crossing Azerbaijan and Turkey, and also playing the role of economic hub between Asian and European markets, as one of the main pillars in the Modern Silk Road. As a matter of fact, the upgrading of Turkmenbashi port will better connect the two shores of the Caspian Sea, implementing the trans-regional railway line connecting Baku, Tbilisi and Kars (Eastern Turkey). The presence of the former Prime Minister Erdogan in the groundbreaking ceremony of the construction of the new Turkmenbashi port on August 15, 2015 – together with Turkmen President – clearly shows the political and strategic relevance of this infrastructure for both countries.
These Turkish investments strongly support Turkmen attempts to achieve a strategy of economic diversification, aimed to lessen the dependence on revenues deriving from the exports of natural gas, following the goals included in the “National program for socio-economic development of the country for 2012-2016.” A key priority of the energy strategy of Turkmenistan will be shifted from exports of raw materials (natural gas and – in lesser extent – crude oil) to exports of finished products through the modernisation of the petrochemical industry and construction of gas processing plants and oil refineries.
The enhancement of the Turkmenbashi complex of oil refineries will increase the domestic production of high-octane gasoline, aviation kerosene, liquefied gas, which could benefit of the port’s upgrading in order to maximize exports.
Turkish companies – together with Japanese firms – are actively involved in the development of Turkmen chemical industry and natural gas processing. At present a Turkish-Japanese consortium carries out a new sulfuric acid production workshop – with a capacity of 500,000 tons per year – at a chemical plant in the city of Turkmenabat, in Lebap province, while another consortium (involving Turkish Rönesans Holding and Japanese Kawasaki) is implementing the project to build a gasoline production plant in Ahal Velayat. Furthermore, a consortium between Gap Inşaat (Turkey) and Mitsubishi Corporation (Japan) has undertaken the realisation of carbamide production plant in Garabogaz – Balkan Velayat – while in October 2014, the Turkish company Renaissance put into operation the complex of the ammonia and carbamide plants in Mary town, after investing US $1 billion. Moreover, Turkish companies are involved in the implementation of many projects in agricultural production, food industry and textile production.
The electricity sphere is another field of fruitful cooperation: Turkish Calik Holding obtained a large five-year project for modernisation of Ashgabat’s power supply system, and construct large power plants in Lebap and Mary provinces, which borders with Afghanistan.
In this case, Turkish investments will allow Turkmenistan to play a significant role in the regional security field, promoting stability in Afghanistan through growing electricity supply. As a matter of fact, following the expected realisation of the new gas turbine power plants in Lebap and Mary regions, Turkmenistan will be able to fivefold increase the electricity supply to Afghanistan.
What brings Turkey and Turkmenistan closer in the energy field?
Moreover, the strategic convergence of reciprocal interests has pushed Turkey and Turkmenistan to strengthen the energy cooperation based on natural gas and export infrastructures. Turkmenistan ranks fourth in the world for the volume of natural gas reserves, after Iran, Russia and Qatar. According the BP Statistical Review 2015, Turkmenistan holds 17.2 trillion cubic meters (tcm) of natural gas reserves, even if the estimates of Turkmen authorities are bigger. As a matter of fact, according to an independent audit the reserves of the Galkynysh field – the second world’s largest in terms of reserves – together with the Yashlar deposits, are estimated at 26.2 tcm, and following the discover of a Garakel new gas field – included in the Galkynysh area – national reserves will rise to 27.4 tcm. The recent energy cooperation with Turkey and Azerbaijan could allow Ashgabat to develop a new and alternative westward route of exports, delivering natural gas to the EU market and lessening the dependence on exports to China.
Trans Anatolian Natural Gas Pipeline project (TANAP) and its aims
The involvement of Turkmenistan in the Trans Anatolian Natural Gas Pipeline project (TANAP) – a section of the Southern Gas Corridor (SGC) project, aimed to deliver 16 bcm of Azerbaijani gas to Europe via Turkey by 2019 – will enhance the role of Ankara as strategic transit hub for gas imports to EU, contributing to the EU energy security by means of the development of a new import route (SGC) which will not carry on Russian gas.
The Strategic Diplomacy of the Trans Caspian Project
Consequently, the diplomatic activism of Turkey and the development of the trilateral dialogue with Turkmenistan and Azerbaijan have revitalised the Trans Caspian project, producing interesting results. As a matter of fact, in November 2014 Turkmenistan signed a framework agreement with Turkey to supply TANAP project. In January 2015, during a trilateral meeting held in Ashgabat, these three countries decided to further enhance their cooperation in energy field and the ministers of Turkey and Azerbaijan invited Turkmenistan to join TANAP project: Turkmenistan’s participation will enhance the capacity of this energy route, which is expected to reach 31 bcm in 2026 and 60 bcm in 2030.
On May 1, 2015 during a meeting of energy ministers of Azerbaijan, Turkey, Turkmenistan and the EU representatives in Ashgabat, the parties signed the «Ashgabat Declaration», focused on the development of cooperation in the energy field.
Worsening relations between Turkey and Russia – linked to the war in Syria – will influence Ankara’s political will to deepen energy relations with Turkmenistan, in order to compensate a potential halt of Russian gas imports – which account for 50% of total imports – and the freezing of the Turkish Stream pipeline project, which should deliver Russian gas to Turkey (additional 15 bcm) and to EU, bypassing Ukraine. In December Turkmenistan concluded the East-West gas pipeline, with a capacity of 30 bcm per year: if environmental and geopolitical problems linked to the realization of the Trans Caspian will be solved, Turkmenistan and Turkey will have the great opportunity to enhance the energy cooperation.
The cooperation between Turkey-Turkmenistan appears economically and politically profitable for both countries, and these two states are most likely to deepen bilateral relations in the next couple of years.
Turkish companies will help Turkmenistan to successfully undertake a process of modernisation with the realisation of transport and energy infrastructures. President Berdymuhamedov and President Erdogan have established fruitful political relations – cemented through frequent meetings and high-level visits – which will reinforce this kind of “Turkic corridor” focused on the geographic centrality of Turkmenistan, developing the east-west economic and energy corridor through the Caspian basin. Republic of Turkey, Ministry of Foreign Affairs, Relations between Turkey and Turkmenistan, http://www.mfa.gov.tr/relations-between-turkey-and-turkmenistan.en.mfa  Jean Baptiste Vilmer, Turkmenistan, CNRS Editions, Paris, 2010, p. 195  Victoria Panfilova, Ashkhabad counts on Turkey’s investment activity, Vestnik Kavkaza, February 12, 2016, http://vestnikkavkaza.net/analysis/Ashkhabad-counts-on-Turkey%E2%80%99s-investment-activity.html  Saban Kardas, Turkey-Turkmenistan Ties Flourish in Economic Realm, in Eurasia Daily Monitor Volume: 9 Issue: 50, March 12, 2012, http://www.jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_news%5D=39125#.VsQzQvnhDIU  Presidents of Turkmenistan and Turkey Hold Talks in Ashgabat, Turkmenistan.ru, November 8, 2014 http://www.turkmenistan.ru/en/articles/17807.html  Tavus Rejepova, Turkmenistan and Turkey Launch Construction of International Port, Central Asian Caucasus Analysts, August 21, 2013, http://www.cacianalyst.org/publications/field-reports/item/12798-turkmenistan-and-turkey-launch-construction-of-international-port.html; A Turkmen port for the Silk Road, Calik Holding, 2013,http://www.calik.com/en/PressReleases2013/2013/08/21/a-turkmen-port-for-the-silk-road?id=1fd2d01e-20f2-4b08-b804  Turkmenistan’s fuel and energy sector: a new phase of diversification, Turkmenistan. The Golden Age, September 17, 2015, http://www.turkmenistan.gov.tm/_eng/?id=5160; Huseyn Hasanov, Japanese-Turkish consortium builds chemical facility in Turkmenistan  3 more new projects from Çalik Enerji to Turkmenistan…Calik Holding, 2013, http://www.calik.com/en/PressReleases2013/2013/05/13/3-more-new-projects-from-calik-enerji-to-turkmenistan?id=30b7f010-ac5b-4abc-bca9-060da046c600  Turkmenistan increasing electricity exports to Afghanistan, Chronicles of Turkmenistan, 9 November 2015 http://www.chrono-tm.org/en/2015/11/turkmenistan-increasing-electricity-exports-to-afghanistan  British Petroleum, BP Statistical Review of World Energy 2015, BP, p. 20 https://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-review-2015/bp-statistical-review-of-world-energy-2015-full-report.pdf  Turkmenistan Heading Towards World Gas Markets, Oil & Gas Eurasia, November 19, 2015, https://www.oilandgaseurasia.com/en/news/turkmenistan-heading-towards-world-gas-markets  Tavus Rejepova, Foreign Ministers of Turkey, Azerbaijan and Turkmenistan Discuss Energy and Transportation in Ashgabat, Central Asia and Caucasus Analyst Institute, March 4, 2015 http://www.cacianalyst.org/publications/field-reports/item/13147-foreign-ministers-of-turkey-azerbaijan-and-turkmenistan-discuss-energy-and-transportation-in-ashgabat.html  Presidents of Turkmenistan and Turkey Hold Talks in Ashgabat, Turkmenistan.ru, November 8, 2014 http://www.turkmenistan.ru/en/articles/17807.html; European Commission, Ashgabat Declaration, May 1, 2015 https://ec.europa.eu/commission/2014-2019/sefcovic/announcements/ashgabat-declaration_en
Author: Fabio Indeo, a specialist in Central Asian geopolitics and a research fellow at the Centre for Energy Governance and Security at Hanyang University in Seoul (South Korea)
The opinion of the author does not necessarily represent the opinion of cabar.asia