Six Arrests at Turkmengaz Over Suspension of Exports from Galkynysh

Six people have been arrested at the Turkmengaz state concern, including the head of the Department for Material and Technical Resources and Procurement, Shohrat Ajdarov, and the acting head of the Turkmengazakdyrysh association (Turkmen gas transmission), Shohrat Chopanov (pictured). The officials are held responsible for the breakdown at Galkynysh, the largest gas field in Turkmenistan, and the interruption to gas supplies to Uzbekistan.

A source in the government says that the head of Turkmengaz, Batyr Amanov, and his deputy Atamurat Charyyev, have managed to avoid punishment so far. But they are most to blame for the failure of the Turkmengaz operation and its loss of position on the international market.

According to preliminary calculations, just six days of forced interruption to gas supplies from Galkynysh to Uzbekistan caused losses of $59.7 million, inspections by the Prosecutor General’s Office revealed. Moreover, Turkmenistan expects to be fined for the shortfall in gas supplies to China.

“The China National Petroleum Corporation is of course using this to achieve its economic plans,” the source says. “In particular, China is already eyeing further development of the field; that is, well drilling and the construction of gas processing units. They will probably manage to get these contracts and under this scenario Turkmenistan will have to repay China for far more than a decade by selling it gas at low prices.”

The breakdown at the Galkynysh field occurred in the worst of the January frosts, when shoddy dehydration sensors stopped working. The Uzbek side demanded a substantial sum in compensation from Turkmenistan, the source reported. However, during talks Uzbekistan was persuaded to take liquefied gas for an equivalent sum instead. The official Turkmen media reported the supply of liquefied gas as a voluntary donation and “friendly, fraternal support to a neighboring country.”

The Turkmen side asked Uzbekistan not to comment on this gesture, according to the source.

Who wins?

The breakdown and interruption in gas supplies during the coldest period has shown Turkmenistan to be an unreliable partner, according to observers in Ashgabat. Compensation in the form of liquefied gas will not bring back Uzbekistan as a customer. From March 1, Russia’s Gazprom will start supplying gas to Uzbekistan, having already signed the relevant agreement with Kazakhstan too.

Gazprom itself buys small quantities of gas from Turkmenistan though it doesn’t really need Turkmen gas. The Russian gas giant does this purely as a political move. Turkmen gas is considered “dirty.” Sources referred to its poor quality when they reported the recent suspension of supplies to Azerbaijan. That problem also arose because of the obsolete equipment at the Chal Oyuk gas metering station.

Overall it’s Gazprom that has gained from the situation, finding new supply markets during a period of sanctions against Russia. The company has signed roadmaps on cooperation with Kazakhstan and Uzbekistan in the gas sector. Observers think that Russia is hoping to gain access to the Chinese market through these countries, i.e. through the Central Asia – China gas pipeline. By interrupting supplies and lowering the quality of their output Turkmengaz is practically undermining itself and helping Gazprom.

Gazprom itself is far from idle, though. The director of the Russian company’s Turkmen branch, Mikhail Ayrapetyan, does not often visit Turkmenistan, but has two trusted employees who are his “eyes and ears”: Shamil Bagayev, who has created an entire “spy network” in Turkmengaz, and a former employee of Turkmenistan’s Interior Ministry, Yuriy Lysenko, who makes use of his contacts from his old job.

Shamil Bagaev’s informers include the head of the Turkmengaz export department, Begench Hudayberdiyev; a leading specialist in the department, Arslan Rejepov; and even the former deputy head of the state concern and cousin of the country’s president, Ahmet Geldimyradov, who was recently dismissed amidst a scandal. Through them Gazprom analysts keep up to the minute on personnel changes in Turkmengaz and on gas supplies to China and Azerbaijan. Moreover, Bagayev tries to keep in with the head of the concern. Batyr Amanov regularly receives New Year hampers worth 1-2,000 dollars, designer briefcases, watches, and other gifts from Gazprom.

At the same time, corruption schemes that suit local specifics are in operation in Gazprom’s Ashgabat office. For example, employees are officially paid a monthly salary of between 2,000 and 5,000 dollars, but give half of it to Ayrapetyan. The employees don’t object: even halved, such salaries are rare in Turkmenistan. And even in the oil and gas sector local specialists do not receive all that much, so if they are not tempted to go and work for Gazprom or other foreign companies, they at least opt for “unofficial cooperation” with them.

At the same time, the Turkmen oil and gas sector still sees itself as offering lucrative employment. For example, the plant producing synthetic gasoline from natural gas in Ahal region, which is experiencing serious problems with exports, demands a bribe from applicants when they are taken on, even from those specialists who are in desperately short supply.

All this has a negative impact on the quality of work of Turkmenistan’s entire oil and gas complex, observers say. Before our very eyes Turkmengaz is now losing the position on the international market that it had managed to acquire. It is obvious that the guilty parties are not the middle managers who have been arrested following inspections but the top managers who are highly incompetent, mired in corruption, and falsify figures.

Deputy Prime Minister Shahym Abdrahmanov who is the government member responsible for the oil and gas sector will soon be stripped of his position, according to the source. In less than two months he has twice received penalties for substandard performance of his duties and errors in his work. The current chairman of the Turkmenneft state concern, Guvanch Agajanov, is being considered for the post. If this personnel change is made, even worse times are ahead for Turkmenistan’s oil and gas sector.