Monday, July 13, 2009

Natural Gas Revenue Comes to Turkmenistan

TURKMENBASHI, Turkmenistan -- Four white-marble hotels opened here in June on a spit of sand by a landlocked sea - the beginnings of what is billed as Central Asia's answer to Las Vegas, an opulent $5 billion oasis of seaside villas, casinos, an artificial island and a ski center.

The resort-to-be stands out in this arid country the size of California, where camels clop down dirt roads and bedraggled Soviet-era apartment blocks doze in the blistering desert heat. Yet Turkmenistan also sits atop the world's fifth-largest reserves of natural gas, and is rapidly emerging as a key player in global energy markets.

Its secretive, autocratic government is using some of its more than $7 billion in annual gas revenues to build the pleasure park, called Avaza. Officials say they hope to attract high-rolling foreign tourists and open up their country, long sealed off from most of the outside world.

"Coming to our country has always been a problem for foreigners," Murat Kariyev, the country's elections commission chairman, told The Associated Press. He called Avaza "the world's window on Turkmenistan."

The world's biggest consumers of energy want to do more than peek through the window at Turkmenistan - they want to barge through the door. The U.S., Europe, China, Russia and Iran are all jostling for greater access to the country's mammoth natural gas fields, which could contain more than 26 trillion cubic yards (20 trillion cubic meters) of natural gas. That's enough to supply Europe with gas for the next 66 years.

The European Union and the United States see Turkmenistan's President Gurbanguli Berdymukhamedov, who took power 2 1/2 years ago, as a potential ally in their efforts to break reliance on Russia for natural gas.

But Russia, Turkmenistan's chief energy partner, is fighting a rearguard action to keep its near monopoly on the purchase of Turkmen gas. In 2008, Russia's state-controlled energy giant Gazprom paid Turkmenistan $7 billion for gas that Russia resold to Europe, according to Global Witness, a London-based watchdog group.

China in turn has moved boldly to challenge Russia, cutting its own energy deal, which includes a $4 billion loan. Beijing plans to begin tapping a major natural gas field in eastern Turkmenistan when a new pipeline is finished as early as this year.

Courted from all sides, sitting on vast wealth, Turkmenistan's regime faces stark choices: to open its doors or live in continued isolation, to push for reform or renew repression.

The Avaza resort on the Caspian Sea symbolizes some of these conflicts. It is designed to appeal to the sophisticated business traveler. Yet during opening ceremonies, the white marble hotels were decorated Soviet-style with gigantic pictures of President Berdymukhamedov, and a huge television screen beamed down a picture of the president's face.

Few visitors are expected at the 50-square kilometer (19-square mile) complex, part of a special visa zone, until a new international airport is completed later this year. Even then, they may not see more than a restricted patch of the country or have much contact with ordinary people.

Critics say the resort is just another example of Turkmenistan's propensity for huge and impractical building programs, shown clearly under former president Saparmurat Niyazov, and could wind up a sinkhole for billions of dollars in gas revenues.

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