Via Energy Daily, a report on the growing energy ties between Turkey and Turkmenistan

Energy-rich Turkmenistan and energy importer Turkey are deepening bilateral ties.

Turkmen President Gurbanguli Berdymukhammedov is making a two-day state visit to Turkey, visiting Istanbul and Izmir.

Turkey’s energy imports of Turkmen natural gas reportedly remain Ankara’s biggest immediate concern, but Turkey has also expressed interest in participating in the construction of the Turkmenistan-Afghanistan-Pakistan-India natural gas pipeline.

Bilateral trade between Turkmenistan and Turkey increased 25 percent in 2011, compared to 2010 levels.

Turkish President Abdullah Gul has made four visits to Turkmenistan in the last several years, with his last official trip in May 2011, during which he discussed ways to improve cooperation in energy, construction, transportation and communication.

“Turkey is the first country to have recognized Turkmenistan as an independent state. Likewise, Turkey was the first to support Turkmenistan’s neutral status in 1995,” Gul said during that visit.

“There have been perfect political relations between Turkey and Turkmenistan. Our aim is to further develop and diversify our cooperation with Turkmenistan on the basis of mutual respect and interest.”

Gul said Turkish firms have undertaken projects in Turkmenistan valued at more than $21 billion in recent years, a total that accounts for 12 percent of such projects by Turkish companies.

“Turkmenistan has achieved a distinguished and influential position in the international community with its neutrality policy. Taking into consideration its rich energy resources, Turkmenistan’s role in regional development and stability is of critical importance,” Gul said.

Berdymukhammedov visited Turkey in February and reiterated that Ashgabat views its relationship with Ankara as strategically important and Turkmenistan would welcome greater investment by Turkish companies.

Both leaders attended the Turkish-Turkmen Business Forum in Istanbul to discuss specific projects.

Turkish Economy Minister Zafer Caglayan has also been a frequent visitor to Turkmenistan, In January Caglayan initialed a protocol within the context of the Turkish-Turkmen Intergovernmental Economic Committee, by which both countries agreed to instruct their Central Banks to make arrangements so they could use their national currencies in bilateral commercial contracts.

Despite the two nations’ determination to deepen relations, in 2011 Turkmen-Turkish bilateral trade accounted for only $8.6 billion, a mere 3 percent of Turkey’s overall trade volume.

Among Turkey’s bilateral trade with Turkic-speaking countries last year, Turkmenistan ranked a distant third after Azerbaijan and Kazakhstan in Turkey’s overall trade.

All three primarily export energy to Turkey.

In 2011, Turkey’s imports from Turkmenistan totaled $392.7 million, while its exports were worth $1.5 billion. Turkmen exports to Turkey consist primarily of energy, textiles, chemicals and agricultural produce, while Turkish exports to Turkmenistan consist of metal manufactures, household goods, hardware, building materials, chemical and light industrial goods, food, vehicles, and medicine.

Rather than large enterprises, most Turkish economic activity in Turkmenistan is still carried out by small- or medium-scale companies.