The recent discovery of a large gas field off Turkmenistan’s Caspian Sea coast should be a cause for celebration in the former Soviet republic, but a lack of customers and little prospect of the much-vaunted trans-Caspian pipeline to supply the European market coming to fruition means the find has, at the moment, little in the way of meaning or ability to generate much-needed hard currency.

Amid a backdrop of losing the custom of Russia and Iran – the former instead opting for Uzbek gas – China has effectively been left as what has been described as Turkmenistan’s sole reliable customer. Whilst the Sino-market is potentially huge, the arrangement between Ashgabat and Beijing is not all it seems. Far from being a lucrative tie-up Turkmenistan appears to be supplying China with a volume of gas commensurate to its debt liability, with a desired hope to increase supply all but scuppered by Uzbekistan suspending construction of the Line D section of pipeline so crucial to Ashgabat’s eastern ambitions. There are though conflicting reports suggesting that Turkmenistan will this year increase volumes to China by 9%, although this might simply be a case of reaching a hitherto unmet capacity within the existing pipeline.

The fall out from Turkmenistan’s disputes between it and Iran and Russia take on a wider significance than just the loss of their custom. Without approval from both Tehran and Moscow a trans-Caspian pipeline to export gas to Europe cannot become reality, a situation that is seeing a virtual land-locking of the country’s energy reserves.

A lack of economic diversification within Turkmenistan has undoubtedly writ large the country’s shortsighted reliance on gas exports, although crucially the money earned during better economic conditions has been frittered away on vanity, Potemkin-esque schemes designed to reflect President Gurbanguly Berdymukhamedow’s power and self-styled wisdom. The construction of the Caspian Sea resort of Awaza and the $2 billion blow out on a falcon-shaped terminal building at the little-used, and rumoured to be sinking Ashgabat Airport are just two examples of projects that will generate little or no financial return for the country. Perhaps the most damning indictment of Berdymukhamedow’s ten year autocratic reign is the alleged absence of a Turkmen Sovereign Wealth Fund. Normally an energy-rich country would prudently sequester funds generated by energy exports to invest in projects overseas, ensuring that once the gas and oil wells run dry there would be alternative means to draw upon. Not only is Turkmenistan unable to export gas to the potentially massive Russian and Iranian markets – nor can it send China the volumes it would otherwise expect to do so – there is little to show for the wealth previously generated by what is, after all, a fortunate geological quirk that by chance bestowed Turkmenistan with riches of which its neighbour Tajikistan can only dream.

The absolute rule of Berdymukhamedow ensures criticism from within his ruling coterie and the country in general is both futile and potentially life threatening. It is perhaps therefore fortunate for the president that Turkmenistan’s natural gas supplies are unlikely to run dry during his lifetime, only after which will the country face the stark reality of being ranked below the likes of Kiribati, Equatorial Guinea, and East Timor in a 2015 list of the world’s largest Sovereign Wealth Funds. The ultimate irony is perhaps the title of the country’s alleged contingency pool – the Turkmenistan Stabilization Fund. Whilst the overwhelming majority of countries listed on the Global Finance website as having Sovereign Wealth Funds highlight the value of their respective assets, the worth of Turkmenistan’s Stabilization Fund isn’t disclosed other than being “n/a”.

Whilst it is of course the prerogative of a nation to not disclose potentially sensitive information of a financial nature, the secretive and opaque stance generally adopted by Turkmenistan does nothing to allay fears that far from merely the outside world not being party to the level of its accumulated funds, there are in fact none.

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