Turkmenistan opens up economy to foreign business

By bne IntelliNews March 17, 2008

Clare Nuttall in Almaty -

Turkmenistan is opening up its economy to foreign companies in line with its long-term economic reform programme. Other reforms include setting a commercial price for petrol, opening foreign exchange offices and plans to carry out an international audit of the country's oil and gas reserves.

Turkmenistan's Strategic Planning and Economic Development Institute has drawn up a long-term strategy for economic revival. In an interview with Neitralniy Turkmenistan, the institute's director Ashyrguly Gurbangulyev said the importance of the private sector in economic development had been recognized, and that the programme would take its interests into account.

Diversification of the economy was identified as another priority - Gurgangulyev said that opportunities existed across several sectors, in particular in textiles and agro-business.

Reforms have already begun. From January 1, the Turkmen central bank set a commercial exchange rate of 20,000 manats to the US dollar. Some 105 foreign currency exchange offices will be opened in Turkmenistan, of which 20 will be in the capital Ashgabat. On February 11, a commercial price for petrol, 7.75-times higher than the previous price, came into effect. The cost of one litre of Turkmenistan's most popular brand, AI-95, has increased from 400 manats to 3,100 manats.

Following his visit to Moscow in February, President Gurbanguly Berdymukhamedov gave the go ahead for state gas company Turkmengaz to sign an agreement with Russian engineering company Stroytransgaz. Under the agreement, the Russian company will build the 800-kilometre section of the new Turkmenistan-China gas pipeline, between the Malai gas field and the Uzbek border. Stroytransgaz will also build a gas purification and dehydration facility and a gas measuring station. The total value of the contract is around $500m.

Former Turkmenistan despot Saparmurat Niyazov agreed in 2006 that Turkmenistan would supply China with 50bn cubic metres (cm) of gas a year for 30 years. Delivery is due to start in 2009 once the pipeline, which will transport gas from Turkmenistan to Urumchi in northwest China and on to Shanghai, is complete.

Last year, the China National Petroleum Company (CNPC) became the first foreign company to be granted a gas prospecting and gas production licence for Turkmenistan. However, an analyst at China National Offshore Oil Corporation (CNOOC) has complained that the $195 per 1,000 cm that China will be paying for Turkmen gas imports is almost twice as high as the $100 paid by Russia for its imports.

As well as the deal with Stroytransgaz, Turkmen companies have agreed several procurement contracts with foreign companies. Turkmenneft, the state-owned oil and gas company, is to sign a €6.33m contract with Germany-based MAN Ferrostaal Piping Supply for 21,000 metres of steel pipes, following an international tender. The Turkmenbashi oil refining complex is to buy over $30m of foreign equipment, including the purchase of five electric engines from Hong Kong's Enex Process Engineering.

Meanwhile, work has resumed on the construction of a bridge across the Amu-Darya by several Ukrainian construction companies following a meeting between President Berdymukhamedov and Serhiy Taruta, CEO of Industrial Union of Donbass. Taruta visited Turkmenistan on behalf of Ukraine's president, Viktor Yuschenko, to discuss problems with several projects being carried out by Ukrainian companies in Turkmenistan. Berdymukhamedov had criticized the Ukrainian construction companies working on the Amu-Darya bridge and a tunnel in Ashgabat for being behind schedule

In a further sign of the opening of Turkmenistan's economy, the country's state news agency recently reported that the government is in discussions with "a well known international company" to carry out an international audit of its two largest hydrocarbon fields, Gunorta Eloten and Osman. Previously, only official Turkmenistan government data had been available. According to the official 2006 figures, the country has proven reserves of around 5 trillion cm of gas.

Send comments to The Editor

Related Articles

Retail trade slows in Kazakhstan amid economic uncertainty

Naubet Bisenov in Almaty - A free-floating exchange regime for Kazakhstan’s currency, the tenge, is taking its toll on retail trade as the cost of imports rise. While prices have not changed ... more

bne:Chart - Russia begins to steady the ship according to latest Despair Index

Henry Kirby in London - Ukraine and Russia’s latest “Despair Index” scores suggest that the two struggling economies could finally be turning the corner, following nearly two years of steady ... more

New Kazakh central bank governor re-adopts free floating regime

bne IntelliNews -   The National Bank of Kazakhstan, the central bank, has re-adopted a free-floating exchange regime under the new governor, Daniyar Akishev, who has ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.