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Natural gas: Turkmenistan could become an important supplier of the EU instead of Russia

In recent months, traditionally isolationist Turkmenistan has begun to make efforts to open itself more to the outside world. As a result, there has been intense competition between major players, including Russia, China and the United States, for access to Turkmenistan's transportation routes and energy resources. A consequence of the opening of Ashgabat was the resurgence of interest in the creation of the Trans-Caspian Pipeline (TCP) to transport Turkmenistan's energy to Europe.

At the end of December 2022, Turkish President Recep Tayyip Erdogan announced Ankara's intention to start work on transporting Turkmen natural gas to Western markets. At a trilateral summit between Turkey, Turkmenistan and Azerbaijan, all sides agreed to work together on the development of the infrastructure needed to supply Turkmenistan gas to Europe, including the development of the proposed TCP, at an estimated cost of around 5 billion dollars, a proposed length of 300 kilometers and an annual capacity of 30 billion cubic meters (Daily Sabah, 14 December 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 Turkmenistan gas to flow to Europe (Aktualinfo.org, April 27, 2022).

TCP has been delayed for several years due to various problems; however, its construction could be significant in bringing energy balance to the region. It is no coincidence that in recent months Turkish Foreign Minister Mevlüt Çavu?o?lu and US Deputy Secretary of State for South and Central Asian Affairs Donald Lu have expressed optimism about Turkmenistan's prospects of supplying gas to the Europe (Trend.az, March 16). Earlier, at a conference in the UAE, Turkmen officials hinted at their country's plans to build a gas pipeline through Azerbaijan to Europe.

Turkmenistan has also shown interest in TCP, participating in several ministerial meetings of the GSC 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 the construction of underwater gas pipelines subject to mutual agreement of the states through whose waters the pipeline would pass (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 joint exploration, development and exploitation of hydrocarbons at the Dostluk field in the Caspian Sea in 2021 has increased the possibilities of realizing this pipeline.

In fact, the EU has been working for decades to build the TCP as the last piece of the GSC to transport natural gas from the Caspian to Europe. It is important to note that the pipeline would bypass Russia and transport Turkmen 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.

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

As expectations are high for potential transit fees that could arise from this project, Azerbaijan, Georgia and Turkey are actively working towards realizing the TCP. In addition, Azerbaijan and the EU have made proposals to Turkmenistan for the transportation of its natural gas. However, Baku said that since TCP relies on Turkmenistan's resources, Ashgabat should take the lead in making key decisions regarding further development (Newscentralasia.net, November 28, 2022). However, Azerbaijani President Ilham Aliyev announced, in November 2022, Baku's intention to expand cooperation with Ashgabat on various energy projects, including in the framework of the Middle Corridor.

Another recent impetus for the construction of the TCP is the discussion of the creation of a gas hub in Turkey, from which energy resources will be supplied to European markets in larger quantities. Ankara understands the potential benefits of becoming an important transit country, with the aim of attracting natural gas from other sources, including Turkmenistan, and acting as an intermediary for the supply of natural gas.

Until now, Moscow had monopolized gas transit routes from Turkmenistan, obtained during the Soviet era, to cheaply re-export gas supplies to Europe and hinder any efforts to build alternative routes that could bypass Russia (Mitsui.com, January 31, 2020). As the EU is now pushing harder for the implementation of the TCP project, Russian Foreign Minister Sergei Lavrov has openly criticized this move, suggesting that the issue should only be resolved between the Caspian littoral states. Furthermore, Iran opposes the project for alleged environmental reasons and has alternatively offered Turkmenistan the use of Iranian infrastructure, neglecting to mention that its underdeveloped pipeline network is unable to handle large volumes. of gas .

At the same time, Turkmenistan depends significantly on Russia for its security. However, due to the instability caused by Russia's reinvasion of Ukraine in February 2022, which prompted Turkmenistan to turn to China as its sole export destination, Ashgabat is realizing the need to diversify its energy partners (Aktualinfo .org, April 27, 2022). TCP therefore represents a crucial means by which Turkmenistan could achieve this diversification. Also, in recent times, Russia has become China's main fuel supplier, which makes the opening to the west more and more attractive for Turkmenistan.

Turkmenistan sees the TCP project as an exceptional opportunity to develop the national energy industry. It is therefore not surprising that Batyr Amanov, Chairman of the Turkmengaz State Concern, underlined the importance of the GSC in diversifying energy supplies for the EU during the 7th meeting of ministers within the Advisory Council on the GSC on 11 February 2021 (Trend.az February 12, 2021). Amanov also stressed that deepening cooperation will be key to enhancing energy security for Turkey and Azerbaijan, among others.

As the supply of Turkmen gas to European markets is capital intensive and requires a large base of regular buyers to support it, some experts have raised questions about the economic feasibility of TCP due to the lack of necessary infrastructure and the difficulty of attracting investment . However, given the recent involvement of various stakeholders in complicated infrastructure projects, including the EU, US, Azerbaijan, Georgia and Turkey; requests not to politicize the supply of energy to Western markets; and the fact that Turkmenistan possesses the fourth largest natural gas reserves in the world, TCP has become a priority for regional energy security, especially to avoid Russian-dominated routes that are riddled with instability. In these circumstances, where international conditions are very favorable and the interests of suppliers (Turkmenistan), transit countries (Azerbaijan and Turkey) and buyers (EU) are remarkably aligned, there is growing cautious optimism that the realization of this crucial pipeline project will happen soon.


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The article Natural gas: Turkmenistan could become an important supplier of the EU instead of Russia comes from Scenari Economics .


This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/gas-naturale-il-turkmenistan-potrebbe-diventare-un-importante-fornitore-della-ue-al-posto-della-russia/ on Sun, 21 May 2023 16:24:52 +0000.