Turkmenistan Considers Sending Natural Gas Supplies to Europe

In recent months, traditionally isolationist Turkmenistan has begun to make efforts to open up more to the outside world. As a result, intense competition has ensued among key actors, including Russia, China and the United States, for access to Turkmenistan’s transportation routes and energy resources (see EDM, May 11). One consequence of Ashgabat’s opening has been the revival of interest in establishing the Trans-Caspian Pipeline (TCP) to transport Turkmenistani energy to Europe.

In late December 2022, Turkish President Recep Tayyip Erdogan announced Ankara’s intentions to begin work on transporting Turkmenistani natural gas to Western markets. At a trilateral summit between Turkey, Turkmenistan and Azerbaijan, all sides agreed to cooperate on developing the necessary infrastructure for supplying Turkmenistan’s gas to Europe, including the development of the proposed TCP with an estimated cost around $5 billion, a proposed length of 300 kilometers and an annual capacity of 30 billion cubic meters (Daily Sabah, December 14, 2022). The pipeline would run from Turkmenbashi to Baku along the bottom of the Caspian Sea and connect to the Southern Gas Corridor (SGC), allowing Turkmenistani gas to flow into Europe (Aktualinfo.org, April 27, 2022).

The TCP has been postponed for a number of years due to various problems; nevertheless, its construction could be significant in bringing energy balance to the region. It is no coincidence that Turkish Foreign Minister Mevlüt Çavuşoğlu and US Assistant Secretary of State for South and Central Asian Affairs Donald Lu have expressed optimism about Turkmenistan’s prospects for supplying gas to Europe in recent months (Trend.az, March 16). Previously, at a conference in the United Arab Emirates, Turkmenistani officials had mentioned their country’s plans to build a pipeline through Azerbaijan to Europe.

Turkmenistan has also shown an interest in the TCP by participating in various ministerial meetings of the SGC Advisory Council (Minenergy.gov.az, February 29, 2020). The convention on determining the legal status of the Caspian Sea, signed at the fifth summit of the Caspian states in Kazakhstan on August 12, 2018, allows for the construction of underwater gas pipelines by mutual agreement of the states through whose waters the pipeline would run (Azatlyk Radiosy, August 16, 2018). As a result, Turkmenistan and Azerbaijan can proceed with the TCP initiative on their own without any third-party involvement. The signing of a memorandum of understanding between Azerbaijan and Turkmenistan on the joint exploration, development and exploitation of hydrocarbons in the Caspian Sea’s Dostluk Field in 2021 has increased the chances of this pipeline coming to fruition.

In truth, the EU has been working for decades to build the TCP as the final piece of the SGC to transport natural gas from the Caspian to Europe. Importantly, the pipeline would bypass Russia and transport Turkmenistani gas without Russian control. The project was even included in a recent list of projects of common interest for the European Commission, underlining its strategic importance (Turkmenportal.com, January 1, 2021).

However, the EU’s desire to expand cooperation with Central Asia, particularly through the TCP, is facing severe challenges. European countries are not willing to enter into long-term contracts for gas supplies due to their goal of stopping gas imports altogether in 10 to 15 years (Lenta.ru, November 21, 2022). For over 20 years, finding primary investors for this project has been difficult. Even so, the EU and US have declared their willingness to help attract investment. As a result, US-based company Trans Caspian Resources has shown an interest in funding the project (Sputnik, December 23, 2022).

As expectations are high for the potential transit fees that could be gleaned from this project, Azerbaijan, Georgia, and Turkey are actively working toward the realization of the TCP. Additionally, Azerbaijan and the EU have made proposals to Turkmenistan regarding the transportation of its natural gas. However, Baku has declared that, as the TCP is based on Turkmenistan’s resources, Ashgabat should take the lead in making key decisions regarding further development (Newscentralasia.net, November 28, 2022). Nevertheless, Azerbaijani President Ilham Aliyev announced, in November 2022, Baku’s intentions to broaden cooperation with Ashgabat on various energy projects, including within the framework of the Middle Corridor.

Another recent impetus for the TCP’s construction is the discussion to create a gas hub in Turkey from where energy resources will be supplied to European markets in greater quantities. Ankara understands the potential benefits of becoming a major transit country, with the goal of attracting natural gas from additional sources, including from Turkmenistan, and acting as an intermediary for deliveries to Western markets (Daily Sabah, December 14, 2022).

Until now, Moscow had monopolized the gas transit routes from Turkmenistan, which it had obtained during the Soviet era, to cheaply re-export gas supplies to Europe and impede any efforts to construct alternative routes that might circumvent Russia (Mitsui.com, January 31, 2020). As the EU is now pushing more fervently for the implementation of the TCP project, Russian Foreign Minister Sergei Lavrov has openly criticized this move, suggesting that the issue should be solved among the Caspian littoral states only. Moreover, Iran opposes the project for alleged environmental reasons and has alternatively offered Turkmenistan the use of Iranian infrastructure, neglecting to mention that its poorly developed pipeline network cannot handle large volumes of gas (Radio Free Europe/Radio Liberty, August 15, 2019).

At the same time, Turkmenistan significantly relies on Russia for its security. Yet, due to the instability brought on by Russia’s re-invasion of Ukraine in February 2022, which caused Turkmenistan to turn to China as one of its only export destination, Ashgabat realizes the need to diversify its energy partners (Aktualinfo.org, April 27, 2022). Thus, the TCP presents a crucial means by which Turkmenistan could achieve this diversification. Additionally, as of late, Russia has become China’s primary fuel provider, which makes opening westward ever-more attractive to Turkmenistan.

Turkmenistan views the TCP project as an exceptional chance to develop its domestic energy industry. As such, it is no surprise that Batyr Amanov, chairman of the Turkmengaz State Concern, highlighted the importance of the SGC in diversifying energy supplies for the EU at the seventh meeting of ministers within the framework of the Consultative Council on the SGC on February 11, 2021 (Trend.az, February 12, 2021). Amanov also emphasized that deepened cooperation will be critical in strengthening energy security for Turkey and Azerbaijan, among others.

As delivering Turkmenistani gas to European markets is capital intensive and requires a large base of regular buyers to support it, some experts have raised concerns about the economic viability of the TCP due to the lack of necessary infrastructure and the difficulty of attracting investment. Nevertheless, given the recent participation of various stakeholders in complicated infrastructure projects, including the EU, the US, Azerbaijan, Georgia and Turkey; demands to not politicize the delivery of energy supplies to Western markets; and Turkmenistan possessing the fourth-largest natural gas reserve in the world, the TCP has become a priority for regional energy security, especially in avoiding Russian-dominated routes that are fraught with instability. In such circumstances in which international conditions are highly favorable and the interests of the supplier (Turkmenistan), transit countries (Azerbaijan and Turkey) and buyers (the EU) are considerably aligned, cautious optimism is growing that the realization of this critical pipeline project will happen sooner rather than later.