A little-known Belgian businessman says his company is poised to clinch a Compressed Natural Gas (CNG) deal with Turkmenistan in November in a potential setback for the EU's Nabucco and Russia's South Stream pipeline projects.
Not many people in EU circles have heard of Koen Minne, a softly-spoken 40-year-old Belgian lawyer who is the CEO of the Brussels-based engineering firm Enex and who also holds the post of Honorary Consul of Turkmenistan to Belgium and the EU.
Speaking in an interview with EUobserver in Brussels on Monday (11 October), Mr Minne said that Enex and a consortium of unnamed EU energy companies is getting ready to pitch its final offer to Ashgabat next month: "I believe that we will have an agreement in November. If everything goes according to schedule, I think we will be ready to have a proposal to take to the Turkmen side."
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The Enex CEO is in a good position to know Ashgabat's intentions. He speaks regularly on the phone to Turkmenistan's deputy prime minister Yagshigeldy Kakayev and foreign minister Rashid Meredov. This year alone he has had seven face-to-face meetings with President Gurbanguly Berdymukhammedov. His company has in recent years brokered €430 million of foreign energy investments in the country.
The CNG project envisages taking between 3 and 4 billion cubic metres (bcm) a year of Turkmen gas by ship across the Caspian Sea to Azerbaijan and pumping it through the existing Baku-Tbilisi-Erzurum gas pipeline to Turkey.
It is still unclear who will build the pipeline link from Erzurum to the EU market and whether Turkmenistan will participate in the Enex-led transit consortium or simply sell gas at its border. But Mr Minne plans to make the first shipments in 2013 or 2014.
If the CNG link is built Ashgabat is unlikely to go along with EU or Russian plans to build new pipelines to Turkmenistan. "It is of course not the intention from the Turkmen side to have Turkmen gas competing with other Turkmen gas ... I don't believe Turkmenistan would sign a policy to feed South Stream or Nabucco," Mr Minne said.
His contacts with Moscow indicate that it is happy for him to go ahead despite the implications. "I did not receive any sign from the Russian side that they would object to this ... the final conclusion is that this is something that no country should feel threatened by," he said.
Some EU diplomats think Mr Minne is a Russian stooge trying to disrupt Nabucco. He denies this. But the EU project, which is much grander than the CNG scheme, has the potential to forge new political ties between Turkmenistan and the West and to accelerate EU integration with the South Caucasus countries in Russia's old sphere of influence.
European Commission chief Jose Manuel Barroso is planning to travel to the Caspian Sea region in late November or early December to promote Nabucco.
EU gas diplomacy has faltered in recent months, however. Turkmenistan declined to come to a minister-level meeting in Brussels on 1 October citing agenda problems and it is fed up with what it sees as EU foot-dragging on the scheme.
"Turkmenistan is really eager to export gas to Europe and if a pipeline was a realistic option I would give it my full support," Mr Minne said. "If they [the EU] are really convinced about this pipeline, I advise them to go in and make a take-or-pay proposal to the Turkmen side. If they would say to Azerbaijan: 'Give me all the possible permits to construct this pipeline.' To Turkmenistan: 'Give me all the possible permits. Then I take responsibility as Europe to build this pipeline. It will be finished within two years and I already guarantee to take 10 or 20 or 30 bcm on a take-or-pay agreement.' This would show the confidence they have in this project looking ahead to the next 10 or 20 years."
A take-or-pay agreement would oblige EU companies to pay for set volumes of gas in future even if demand goes down.
Cruel and unusual?
Leading NGOs such as the London-based Global Witness and the New-York-based Open Society Institute continue to describe Turkmenistan as one of the most repressive and corrupt countries in the world, further complicating EU relations on human rights grounds.
Mr Berdymukhammedov's predecessor, the late Saparmurat Niyazov, drank two bottles of cognac a day, built a rotating statue of himself in Ashgabat and asked a French firm for a $500 million bribe to sign a gas deal.
Mr Minne said the country still has a long way to go. But he described the new leader as a "very normal" man who is "focused on getting things done" and who has a "vision" for the gradual technological and political transformation of Turkmen society: "I am serious - I am not just saying this for the record. Perhaps in other circumstances, it would be difficult for me to work for him."
He described how Enex and its clients such as Honeywell and Schneider Electric do business with Ashgabat to indicate that everything is above board.
"If I am to deliver a gas compressor worth €50 million I have certificates of origin, certificates of quality, transport documents. I present this set of documents to Deutsche Bank and upon establishing the compliance of the documents with Turkmenistan's letters of credit, Deutsche Bank pays me and this money is transferred to my account to pay for the equipment. Deutsche Bank then gets its money from the Central Bank of Turkmenistan," he said.
"Everything comes into the accounts of an EU company bank. You can't divert money from such a company without the auditor seeing this ... Honeywell, Schneider - they are publicly listed, so I don't know how they could go along with anything like that [bribes]."
Editors Note: This article was corrected at 5pm Brussels time on 14 October 2010. The original version said that former president Saparmurat Niyazov once had a prisoner boiled alive. The incident in fact occurred in Uzbekistan