*2.4. Turkmenistan*

Turkmenistan has the 6th largest natural gas reserves in the world, at 7.5 Tcm [39]. During the Soviet era, Turkmenistan sent gas to the republics and received transit permission through Russian territory to sell gas to European customers. Deliveries of Turkmen gas were often disrupted due to the inability to pay (repay debts) for the imported gas, Turkmenistan's demands for a higher price, hold-up by a transit country, and technical issues.

Turkmenistan's dependence on transit countries was the highest until the late 1990s, when only one gas export pipeline was available, which connected Turkmenistan to Russia via Uzbekistan and Kazakhstan (Central Asia—Centre). Since 1993, Russia has stopped exports of Turkmen gas to Europe.

In 1997, Turkmenistan and Iran built a connecting pipeline with an initial capacity of 4 bcm per year, which was doubled by 2006 [34,40]. Iran financed much (80%) of the pipeline construction costs (\$190 million), and 35% of annual deliveries of Turkmen gas were considered as reimbursement for Iran's contribution [41].

In August of 2007, Turkmenistan and China started the construction of a connecting gas pipeline via Uzbekistan and Kazakhstan; Turkmenistan granted Chinese CNPC local exploration and production licences [34]. On 14 December 2009, gas started flowing from Turkmenistan to China [42,43]. Initially, the gas flow was around five bcm per year, with the full capacity of 40 bcm per year expected to be achieved by 2012.

Although these relatively newer pipelines to Iran and China improved Turkmenistan's export options, a substantial share of the exports still had to transit through Uzbekistan and Kazakhstan.

#### 2.4.1. Price Demands and Discontinued Supplies in 1992

In 1992, Turkmenistan demanded payment for its gas from all former republics in hard currency. Numerous non-payment disputes followed. In the spring of 1992, a price dispute between Turkmenistan and Ukraine led to the disruption of gas supplies to Ukraine. Turkmenistan wanted a price of \$80/1000 m3 (comparable to the Norwegian export price of \$92/1000 m3 [44]. Ukraine refused to pay more than \$4.7/1000 m3. Turkmenistan cut the supplies on 1 March. After negotiations, Turkmenistan resumed gas supply in the autumn with the price set at \$7.2/1000 m3 until the end of 1992 [45].
