Monday, July 15, 2013

tuesdays in turkmenistan: the potential of Galkynysh

I have been sitting on this post for a couple weeks. Now that I'm back in the blogging spirit, this is a good time to post. It would have come out last week had it not been for my visit to Ashgabat last week. In fact, my visit was partially related to this subject, but alas, no further details can be provided on the matter.

There is a massive gas field in Turkmenistan called Galkynysh. The field, which used to be called Yoloten, is massive. One of the largest gas fields in the world ever to exist. If you have ever heard me speak about the potential of this country and where its financial future lies, it is this field I have in mind. It is the country's goal to produce gas from this field soon, and eventually reach quantities that will sustain pipelines to China, India, Europe and anywhere else they can find a market. Turkmenistan has the opportunity to become like some of the oil-rich Gulf nations. High resource wealth mixed with low local population means a very-high average standard of living can be achieved. There are two major social stumbling blocks in addition to the many technical and geopolitical ones. Only touching on the technical aspects briefly, I want to mention that this is not an easy field. Drilling will require a reasonably high level of technical sophistication. In terms of geopolitics, gas means pipelines for Turkmenistan as a land-locked nation (ignoring the Caspian). Pipelines need to be built and maintained. Ok, there's one to China now (in addition to the one through Kazakhstan and Russia). But building one to India, through Afghanistan and Pakistan, will not be easy and a trans-Caspian line to Azerbaijan and eventually Europe will also meet with resistance, mostly from Russia. I think these are actually all fixable problems. Some of it is technical, some is political, and money will carry the day to get things done.

Back to the social stumbling blocks. First, a high average standard of living does not mean a good standard of living for everyone. Some people will do very well, and there are always some who do exceedingly well for themselves in places like this, while others will do moderately well (ie: the future professional/middle class), and there will be those who do not fare so well. Perhaps progress will bypass their lives or social programs will not reach all corners of the country or perhaps plain old ethnic divisions will continue. Ashgabat has become a shining marble beacon already, but the rest of the country has yet to be so fortunate. How long and how extreme can the disparity become until it creates unrest? The next 10-20 years will be interesting to say the least.

The other social stumbling block is labor. As in, where does the labor come from? Does Turkmenistan want to go the same direction as some of the Gulf states and import significant amounts of expats? For its own sake, I think it should not and in practical terms, it may not be able to anyway. Countries like Bahrain and Qatar have less than one million citizens each, but have total populations that are more than half-expat. Saudi Arabia is the world's largest oil producer with less than a tenth the population of the U.S. (which itself produces more oil than most people realize). Turkmenistan, with 5-6 million residents does not seem eager to embrace significant amounts of outside labor. For sure it exists, as evidenced by significant numbers of Turkish construction projects. However, the Chinese, despite their investments into the country, have been rebuffed many times and only a limited number of visas are available for Chinese nationals to support the operations of the Chinese state company CNPC in the eastern part of Turkmenistan. And vast waves of cheap labor from India and Southeast Asia like you see in Bahrain, Qatar, and U.A.E., have yet to flood into the country. There are obvious hurdles in terms of getting visas, but additionally, local labor is still relatively cheap. The challenge lies with the quality of local labor. It would benefit the country to significantly invest in education and health services. The benefits are numerous: educated labor force, reduced population growth (which is rather high), and the ability to employ the nation's citizens in the nation's own projects. This allows more of the investment to stay in the country instead of going abroad with expats like myself.

There is so much potential here. Turkmenistan has before it so much opportunity, but fulfilling these opportunities depends on the people here, especially the political leaders.

1 comment:

Anonymous said...

Would it be any different from Azerbaijan, political wised?