Turkmenistan President Niyazov announced his intention to sign a long-term contract with the Russian firm Gazprom but offered a window in the negotiations by extending the mandate for PSG Corporation and the TCGP consortium until March 20. The conflict was resolved a few weeks later on March 9, when Niyazov was shown on Ashgabat television announcing an agreement with Azerbaijan President Heydar Aliyev to scale down Azerbaijan's demands for 14 bcm to only 5 bcm, one-sixth of the pipeline's capacity. The Chairman of the Board of Gazprom Rem Vyakhirev was actually in Ashgabat waiting for TCGP talks to fail in mid-February. Russia habitually sees Turkmenistan as a competitor in international energy markets, and limited the Turkmenistan's access to its own pipeline system throughout the 1990s. In fact, Turkmenistan cancelled an agreement with Gazprom in 1997 because the price it demanded was unacceptably low.
Price is a constant source of friction.
That issue was settled at the mid-November 1999 OSCE summit in Istanbul. Azerbaijan simply wanted to negotiate throughput quotas for its maximum TCGP production ahead of time, even if it would take several years to reach a higher figure. Presidents Niyazov and Aliyev reportedly agreed, in their telephone conversation, that Turkmenistan would take the lead in drawing up the facilitating inter-governmental agreements. Should further tensions and disagreements slow the development of the TCGP or should Azerbaijan's Shah-Deniz gas production ramp up above initial volumes, a separate gas pipeline to Turkey originating in Azerbaijan is still possible. Dr. Robert M. Cutler is a Montreal-based analyst of European and Eurasian affairs.