EXECUTIVE SUMMARY

At the beginning of this decade, Turkmenistan was enjoying the privileges of its position as an exporter in three different directions, which led the Turkmen government to rest assured of the benefits the Turkmen energy policies provided for the economy of the country. In the last couple of years, however, the conditions have changed drastically, as Turkmenistan has been increasingly dependent on a sole customer; export revenues have dropped significantly; and the country has remained well behind of its plans about the production levels. By analyzing the country’s current problems with production and exports, this report recommends the Ministry of Oil and Gas of Turkmenistan to firstly re-consider its specific energy policies pursued since 1990s, which prevent the government to act pragmatically towards tackling its major challenges. Two of these policy options are emphasized specifically: i) the government does not provide production sharing agreements on its onshore fields to the international oil companies, maintaining its total responsibility for developing those fields (IOC); ii) the government pursues the policy of selling gas at the borders of the country, requiring the interested actors to take on the financing risks and costs of the transportation. By addressing these issues, the government has to acknowledge that this kind of policies of adjusting external demands to its own domestic needs rather than adapting itself, are no more valid within the new circumstances, where the country has to strive with all its means for attracting necessary investment and new customers. These arguments are followed by an additional thematic set of recommendations, aimed at: preventing inefficient associated gas production on the offshore fields; attracting key actors for the realization of the alternative export routes, namely, Turkmenistan-Afghanistan-Pakistan-India pipeline (TAPI) and the proposed routes to Turkey and Europe (via pipeline or tankers); and achieving the diversification of its export products.

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