BUILDING a Trans-Caspian Pipeline would allow the European Union to triple gas imports from the Caspian region in five years. The first gas supplies from Turkmenistan could arrive in Europe in four years, if the plans go ahead, writes World Review expert Dr Frank Umbach.
The EU, Turkmenistan, Turkey and Azerbaijan adopted a joint declaration on May 1, 2015, to welcome the completion of the preliminary environmental study on the Trans-Caspian Pipeline. It has financial backing from the EU and the World Bank. The environmental study will be published before the end of 2015.
A joint working group on a Trans-Caspian Gas Pipeline (TCP) project has been formed.
The pipeline would see EU gas imports from the Caspian region increase from 10 bcm to 30 bcm after 2020 with the first Turkmen gas supplies expected in 2019.
The impact of the Ukraine conflict and the EU’s rising distrust of Russia have created new dynamics, changed geopolitical patterns and the EU’s future role in Central Asia as Turkmenistan, Azerbaijan and Turkey look to reduce their energy dependence on Russia and diversify their gas export and import supplies.
Russia announced it is cutting gas imports from Turkmenistan to 4 bcm in 2015. This is due to Russia’s own gas crisis and a potential production surplus of up to 100 bcm with no market.
Russian energy giant Gazprom’s decision to reduce gas imports has angered the Turkmenistan government which believes Gazprom is violating inter-state, inter-government and inter-department agreements.
Azerbaijan and Turkmenistan’s successful gas export diversification efforts have rung alarm bells in Russia which has monopolised gas exports from the Caspian Sea region and Central Asia for several decades.
The EU and Turkmenistan have intensified talks since 2014 about exporting Turkmen gas to Europe and building the TCP between Turkmenistan and Azerbaijan.
Gas exports from Azerbaijan’s Shah Deniz field to Turkey began in 2007. The EU discussed receiving Turkmen gas supplies via a TCP through Azerbaijan, Georgia and Turkey for the original Nabucco-pipeline, as part of the EU’s Southern Gas Corridor project. But this EU-backed gas pipeline project failed in 2013.
It has been replaced by building the Trans-Anatolian Pipeline (TANAP) from eastern to western Turkey with the linked Trans-Adriatic Gas Pipeline (TAP).
The first Azerbaijan gas supplied from its huge Shah Deniz-2 offshore gas field in the Black Sea is projected to flow to the European markets by 2019. Gas from Turkmenistan, Kurdistan and Iran could also be transported via TANAP and TAP and/or other pipelines to Central Europe.
Turkmenistan has the world’s fourth-largest total of proven gas reserves with 17.5 trillion cubic metres (tcm) – 9.3 per cent of global gas reserves. Its giant Galkynysh gas field is one of the world’s largest and already exports to China.
Turkmenistan plans to increase gas production to 230 bcm and gas exports to 180 bcm by 2030. Its total gas exports will grow from 40.1 bcm in 2013 to 48 bcm in 2015.
Given its rich gas resources and gas export interests, Turkmenistan is an attractive source for several larger energy projects and gas-consuming countries such as China. Turkmenistan is China’s biggest gas supplier.
Turkmenistan also wants to diversify its gas export routes via a new pipeline from Turkmenistan to Afghanistan, Pakistan and India (TAPI).
TAPI could permanently alter the geopolitical patterns of Central Asia as a resource basis for Eurasia, South and East Asia as Central Asia becomes more independent from Russia.
Finding a solution for Turkmenistan to transport its gas to Europe is also more urgent as it completes its own East-West Gas pipeline (EWP) from its giant fields in its eastern region to the Caspian Sea by late 2015. It began building its US$2 billion, 766-km pipeline with a capacity of 30 bcm in 2010 on an EU promise to build its Nabucco-gas pipeline and the TCP.
Azerbaijan’s support for the TCP is uncertain, although it would receive transfer fees from Turkmen gas exports via Azerbaijan to Europe. Azerbaijan has discovered new gas fields, in addition to Shah-Deniz 2, as the main gas source for feeding TANAP and TAP.
The prospect of extra gas supplies from Azerbaijan or Turkmenistan to Europe is also complicated by Europe’s continuously declining gas consumption over recent years. New gas demand forecasts indicate that Europe’s imports may be even lower in 2030 than 2010 because of an expansion in renewables and energy efficiency.
But the real challenge in building a 300 km pipeline under the Caspian Sea, supported by the US, is the opposing strategic interests of Russia and Iran. They have no interest in finding a compromise for the unresolved status of the Caspian Sea and Russia has a strong interest in preventing Turkmenistan exporting gas to Europe as it will be another competitor undermining Russia’s geopolitical influence in Europe.