Europe’s wait for Turkmen natural gas continues

In response to the Kremlin’s war against Ukraine, the European Union is preparing to wean itself off Russian natural gas. While the move makes geopolitical sense, the Russian gas supply cut has already caused economic hardship. Before the war, Russia supplied 40% of European gas. The European Union now aims to achieve energy independence from Russia by 2030. Moscow has retaliated by restricting gas flows to Europe and even shutting down the crucial Nord Stream 1 pipeline, making skyrocketing energy prices.

The European Union is now desperately looking for new sources of natural gas. Turkmenistan, with the fourth largest gas reserves in the world, appears to be a possible supplier. The Central Asian country has been going through an economic crisis for some seven years and needs customers for its natural gas. But there is still no physical connection between Europe and Turkmenistan to ship the crucial cargo, and Turkmenistan’s repressive government has a poor human rights record. More importantly, Turkmenistan appears determined to favor its ties with Russia and Iran over any potential market opportunities in Europe. As a result, there are no signs of urgency for Turkmenistan to export its gas to Europe anytime soon.

The long saga of bringing Turkmen gas to Europe

The idea of ​​bringing gas from Turkmenistan is not new. The proposal for a Trans-Caspian pipeline dates back to the mid-1990s. The European Union included Turkmenistan in its Southern Gas Corridor projects, part of which is already in operation, to transport gas from Azerbaijan’s Shah Deniz II field to the sea Caspian through Turkey to the Trans-Adriatic Gas Pipeline which supplies gas to Greece, Albania, and Italy.

The plan was for Turkmenistan to supply about 30 billion cubic meters (bcm) of gas per year, via a pipeline that ran along the bottom of the Caspian Sea to Azerbaijan, where it would be fed into the network of pipelines leading across the Caucasus to Turkey. From there, the gas would be exported to Europe.

In 2021, the European Union imported some 155 billion m3 of gas from Russia, or 39.2% of EU gas imports. Russia has the largest proven gas reserves in the world with 37.4 trillion cubic meters (tcm), Turkmenistan 13.6 tcm (according to some sources 19 tcm) and Azerbaijan 2.3 tcm. Turkmenistan has enough gas to somewhat offset the loss of Russian gas to the European Union, but Turkmen gas must first reach the western side of the Caspian Sea – and that has been the major problem.

Russia and Iran have continually opposed the construction of the Trans-Caspian Gas Pipeline. Both countries cite environmental concerns, but some believe this rationale masks trade concerns. The Kremlin, naturally, did not want Turkmenistan to cut off Russia’s share of the European gas market. Iran was blocking in the same way what could be the project of a competitor if the time came for the lifting of international sanctions against Tehran for its nuclear program. With the second largest gas reserves in the world (32.1 tcm), Iran would be able to export to Europe via a much easier land route.

When the leaders of the Caspian littoral states met in Aktau, Kazakhstan in August 2018, they signed the Convention on the Legal Status of the Caspian Sea. He should have removed the obstacles to the construction of the Trans-Caspian pipeline, but he did not. The agreement states:

The Parties may lay subsea trunk pipelines on the bed of the Caspian Sea, provided that their projects comply with the environmental standards and requirements set out in the international agreements to which they are party, including the Framework Convention for the Protection of the marine environment of the Caspian Sea and its relevant protocols.

This formulation gives Russia and Iran a say in environmental standards and requirements for the construction of a pipeline between Turkmenistan and Azerbaijan. As a result, the convention did little to change the status quo that existed before the document was signed.

Recent signs indicate that Turkmenistan does not intend to insist on this point.

Turkmen-Russian relations remain close

On March 12, 2022, Serdar Berdymukhammedov was elected President of Turkmenistan, succeeding his father Gurbanguly Berdymukhamedov, who had held the same position since 2007. Serdar’s first official trip as president was to Russia on June 10. Russian President Vladimir Putin previously awarded Serdar the Order of Friendship in May for his “great contribution to strengthening the strategic partnership between the Russian Federation and Turkmenistan”.

When the Turkmen and Russian presidents met in Moscow in June, Putin said: “Russia and Turkmenistan attach great importance to joint work with the Caspian states in the field of security, economic partnership, conservation of natural resources and maintenance of environmental well-being. “Putin’s choice of words indicates Russia’s opposition to the Trans-Caspian pipeline for ostensibly environmental reasons.

Russia’s influence over Turkmenistan has grown in recent years. Due to its long international isolation, Turkmenistan has no strong allies to turn to.

Turkmenistan’s economy is based on gas exports, which are said to account for 80% or more of state revenue, although this remains unclear as Turkmen authorities rarely release figures, and even when they do, the figures tend to stretch credibility.

Russia’s state-owned gas company Gazprom suspended imports of Turkmen gas in early 2016, after years of price disputes that saw Russian imports of Turkmenistan plummet from over 40 bcm in 2008 to around 4 bcm in 2015.

With Turkmenistan’s economy continuing its steep decline and no relief in sight, Gazprom agreed to resume gas purchases in 2019. Supplies were modest – just 5.5 billion cubic meters in 2019 – but money was a lifeline bailout for the Turkmen government. In 2021, Russia increased its imports to some 10 billion cubic meters of Turkmen gas. Gazprom chief Aleksei Miller visited Turkmenistan on August 29, meeting separately with President Serdar Berdymukhammedov and his father. Miller discussed gas purchases with Serdar, but reports did not mention whether there was a new deal.

Three days before Miller’s visit, Moscow announced that Russian President Vladimir Putin was awarding Gurbanguly Berdymukhammedov the Order of Merit for Services to the Fatherland.

The Turkmen government has said nothing about Russia’s war on Ukraine, but there are indications that Turkmenistan is more interested in its relations with Russia than in uniting efforts to isolate Moscow. In late March, as international sanctions against Russia began to weigh, Turkmen farmers and businesses were ordered to increase food exports to Russia, despite shortages of basic commodities in Turkmenistan.

And Serdar Berdymukhammedov has a personal connection with Russia. He attended the Diplomatic Academy of the Russian Foreign Ministry from 2008 to 2011 (and simultaneously served as an adviser at the Embassy of Turkmenistan in Moscow).

Improve relations with Iran

For his second trip as president of Turkmenistan, Serdar visited Iran on June 14. Iranian-Turkmen relations have also improved recently after plummeting in early 2017 when Turkmenistan cut gas supplies to northern Iran, citing non-payment of a decade-old bill of around $1.8 billion. Iran’s northern regions are still poorly connected to the country’s energy grid and Turkmen gas was essential to keep the regional economy running.

Both countries are now close to debt settlement. Turkmenistan and Iran also talked about resuming gas shipments and bolstering an existing swap deal under which Turkmenistan shipped 1.5 to 2 billion m3 of gas to northern Iran, and l Iran sends a similar amount to Azerbaijan, for which Azerbaijan pays Turkmenistan.

Turkmenistan began exporting electricity to Iran in 2003, but supplies have been interrupted several times due to disagreements between the two governments. Turkmenistan resumed electricity exports to Iran in June 2021. Later that year, during the visit of Turkmen Foreign Minister Rashid Meredov to Tehran, the two countries signed an agreement for the construction of a 400 kV transmission line to increase Turkmen electricity exports to Iran.

Turkmen officials also inquired about the possibility of exporting electricity via Iran to third countries.

The geopolitical choice of Turkmenistan

Europe desperately needs new sources of cheap natural gas. Serdar Berdymukhammedov’s choice of Moscow and Tehran for his first two foreign visits as president is an indication of the direction of Turkmenistan’s foreign policy. The repressive Central Asian state will likely maintain its ties with Russia and deepen its cooperation with Iran while keeping the West at bay.

Turkmenistan would risk souring relations with Russia and Iran if it ever builds the Trans-Caspian pipeline, making it unlikely that Europe will see Turkmen gas anytime soon.

The opinions expressed in this article are those of the author alone and do not necessarily reflect the position of the Foreign Policy Research Institute, a nonpartisan organization that seeks to publish well-reasoned, policy-oriented articles on U.S. foreign policy and the national security. priorities.

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