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Asia Today ISSN 1861-4604 Saturday, August 18, 2018

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Trans-Caspian pipeline - Turkmenistan’s best hope for diversification?

US expert on Central Asia Bruce Pannier believes

Share on Facebook November 10, 2015, Reporter : Trend, Reader : 619

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Baku, Azerbaijan, Nov. 10 By Aygun Badalova - Trend: The Trans-Caspian gas pipeline (TCP) project is Turkmenistan’s best hope for diversification now, and the country’s work on TAPI does not mean that it has given up on TCP, US expert on Central Asia Bruce Pannier believes.

“Turkmenistan desperately needs to export gas somewhere else besides China. Russia only imported 4 billion cubic meters (bcm) of Turkmen gas this year and I have not heard yet that Russia plans to buy any Turkmen gas in 2016,” Pannier told Trend.

He went on to add that Iran might import some Turkmen gas during the coming winter months.

“But even then, Iran is sure to attract foreign investors for its oil and gas industry once sanctions are lifted, so it is only a matter of a couple of years before pipelines connect Iran’s gas fields in the south to the northern part of the country. The only reason Iran purchased Turkmen was to supply areas in northern Iran,” Pannier said.

"So Turkmenistan is faced with having one customer for its gas," he said. "China does plan on buying a large amount of Turkmen gas, up to 80 bcm annually."

Pannier noted that no exporter wants to be reliant on one customer, and as far as Turkmenistan is concerned, the country will have a weak position at the bargaining table with China for many years.

“China has funded construction of the four gas pipelines leading from Turkmenistan to China and China has loaned Turkmenistan billions of dollars to develop the massive Galkynysh field,” Pannier said.

Turkmenistan’s only hope for leverage in dealing with China is if Ashgabat can point to another customer, or better still, customers who would be willing to buy Turkmen gas if China does not want it, he believes.

For example, if the TCP was built, Turkmenistan could say the Europeans are willing to pay “X” amount of money for Turkmen gas so China should be prepared to pay something comparable for Turkmen gas, Pannier said.

Explaining why the Trasn-Caspian pipeline project is the most optimal way for Turkmenistan to diversify its supply routes, Pannier said that the country does not want to deal with Russia to ship gas to Europe via Russian pipelines - Ashgabat tried that for many years and there were many problems.

“I doubt Russia would be interested in allowing transit of Turkmen gas through Russian pipelines to Europe. Russia needs to sell its own gas to Europe,” Pannier said.

He said that the best chance for building a pipeline through Iran to carry Turkmen gas is being removed.

Tehran was more amenable to helping Caspian neighbors when international sanctions were on Iran, the oil swaps with Kazakhstan and Turkmenistan being an example, according to Pannier.

“I doubt Tehran will be willing to allow Turkmen gas to transit Iran’s pipeline network for the same reason Russia has, Iran would rather sell its own gas,” the expert said.

He also believes that TAPI project will not be possible anytime soon.

“That leaves the TCP,” Pannier said however adding that Russia and Iran object to the TCP being built officially.

And the reason for objection is not only environmental concerns but also because they view TCP as a competitor project to their own sales, in Iran’s case potential sales, to Europe, Pannier believes.

“Also, the legal status of the Caspian is not agreed upon so Moscow and Tehran have something of a legal basis for delaying the project,” he added.

At the same time Pannier believes that Turkmenistan has already done all it can for the TCP.

“The East-West pipeline that aims to carry some 30 bcm of gas is also nearly complete and would, as the situation stands now, be used for the TCP,” Pannier said.

“So Turkmenistan is ready but someone needs to build the TCP,” he added.

The Trans-Caspian pipeline project envisages the laying of around 300 kilometers long gas pipeline under the Caspian to the shores of Azerbaijan. Further Turkmen can be transported to Turkey which has mutual borders with European countries.

The project may be implemented as a part of huge Southern Gas Corridor project designed to transport gas from the Caspian region to European countries.

The negotiations on the Trans-Caspian gas pipeline among the EU, Azerbaijan and Turkmenistan began in September 2011. Ashgabat believes that the consent of the sides, covered by the project, that is, Turkmenistan and Azerbaijan, is sufficient for laying the pipe through the bottom of the Caspian Sea, the legal status of which has not been defined.

Azerbaijan expressed its readiness to deliver its territory, transit opportunities and infrastructure for implementing the project.

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