Via Stratfor (subscription required), interesting analysis of Turkmenistan’s increasingly desperate efforts to diversify its energy partnerships beyond Russia which recently cut off its imports of Turkmen natural gas, halving Turkmenistan’s income.  As the article notes:

“…Turkmenistan is the only Central Asian state that is self-sufficient in both energy supplies and electricity production. The country currently produces 9.3 billion kilowatt-hours (Bkwh), with the potential of increasing production to approximately 13 Bkwh with its current infrastructure. Since Turkmenistan uses less than 7 Bkwh, if it pushed production to capacity it could export more than half of its electricity to its neighbors.

The problem is Turkmenistan’s geographic location. The country already exports electricity — as well as natural gas and oil — to neighboring Iran, Kazakhstan and Afghanistan. But those supplies go to certain isolated regions in those countries, just across the Turkmen border. Iran, Kazakhstan and Afghanistan do not have cross-country power grids that would allow Turkmenistan to expand its electricity supplies to these countries in any meaningful way, much less transit electricity to other states in the region.

The proposed deal with Pakistan — which has been suffering from crippling shortfalls in domestic power generation — would require the use of Iran or Afghanistan as a transit state. Iran’s electricity grid is split into two parts — one for the country’s northwest and one for the east. Any new electricity system created between Turkmenistan and Iran would have to transit not only multiple vast, uninhabitable deserts but also the lawless Balochistan region. Afghanistan has similar problems and is also dealing with a full-scale war. Neither Iran nor Afghanistan offers viable options for building power lines to Pakistan.

However, right now Turkmenistan is looking for any energy deal it can make with almost any player, because Russia’s sudden halt of Turkmen natural gas imports has cut off most of Ashgabat’s cash flow.

On April 9, Russia suddenly stopped taking in Turkmen natural gas, halting 84 percent of Turkmenistan’s exports. Russia — which is experiencing a natural gas glut — said it warned Turkmenistan of the cutoff but Ashgabat did not comply and kept sending the usual amount of natural gas, which allegedly led to a pipeline rupture. Since the breach, Russia has not resumed importing Turkmenistan’s supplies, saying that it simply cannot handle the imports right now. STRATFOR sources in Turkmenistan said that Moscow has told Ashgabat that it can only resume receiving exports if Ashgabat drops the price, making it more profitable for Russia to take Turkmen natural gas than produce its own. The Turkmen government has been loath to drop the price, since natural gas exports are one of Turkmenistan’s only income sources. Turkmenistan has a $30 billion gross domestic product, half of which comes from natural gas exports. Without Russia as a natural gas customer, Ashgabat is losing just over $1 billion a month. Turkmenistan is also being forced to start shutting down fields, which cuts investment from the foreign companies running the fields.

In short, Turkmenistan could go bankrupt if energy revenues do not start coming in from somewhere. Ashgabat is talking to almost every potential partner it can find to try to make deals. Turkmenistan knows that the large, more profitable deals with Western partners — like the Nabucco or Transcaspian natural gas pipelines — would take years to complete, and thus would not help in the short term. Thus, Turkmenistan is considering increasing electricity production and is trying to cut deals with Turkey, Armenia, Iran, Afghanistan, Kazakhstan, Uzbekistan and Pakistan. But each of these projects would face geographic barriers, which rules them out as short-term solutions.

While Turkmenistan is feeling out all its alternatives, it is starting to realize that its only option is to remain beholden to the country that put it in this position to start with. Ashgabat knows that if it wants to stay afloat, it will have to not only continue talks with Russia over energy, but also offer Moscow something to persuade it to resume buying Turkmen natural gas. Russia is interested in quite a few things concerning Turkmenistan — a cessation of energy deals between Turkmenistan and non-Russian partners (like the West, Iran and China), or Turkmenistan’s return to Moscow’s fold via Ashgabat’s membership in either the Shanghai Cooperation Organization or the Collective Security Treaty Organization.”