Turkmenistan eliminates another obstacle to direct gas exports to Europe

ASHGABAT -- A recent agreement between Turkmenistan and Azerbaijan over the Dostluk (Friendship) gas field in the Caspian Sea is reviving hope of building the Trans-Caspian Gas Pipeline (TCGP).

If built, the pipeline would provide an alternative source of natural gas for Europe, which buys much of its gas from Russia.

Russia is the largest supplier of natural gas to the European Union, which has made some importers nervous given the Kremlin's past use of the resource as leverage.

Vladimir Putin's regime has periodically cut off deliveries of natural gas to Ukraine as a way to pressure the country into paying off its debts to Gazprom, the Russian gas giant. But when Ukraine loses gas, so do numerous other European countries waiting for it at the end of the trans-Ukraine pipeline.

Ukraine, and other countries, have questioned whether the Russian regime cares more about the debt or about the value of gas cutoffs as a political weapon. About 80% of Russian natural gas exported to Europe passes through Ukraine.

If the TCGP is built, Turkmenistan -- and also Kazakhstan -- will be able to deliver gas to Europe through a future 300km gas pipeline running along the bed of the Caspian Sea, circumventing Russia.

Presently Turkmenistan has no outlet to Europe except through the pipelines of its rival, Gazprom.

Friendship and hope

The foreign ministers of Turkmenistan and Azerbaijan on January 21 signed a memorandum of understanding (MoU) to jointly develop the Dostluk (Friendship) gas field.

The signing ceremony took place immediately after a videoconference between presidents Gurbanguly Berdymukhamedov and Ilham Aliyev, the Turkmen Foreign Ministry said in a statement.

The top priority of the partnership is co-operation in the Caspian Sea, the parties said.

In signing the MoU, Turkmenistan and Azerbaijan have eliminated a problem afflicting their relations for many years and have renewed hope for the TCGP, observers say.

The other littoral states of the Caspian Sea are Russia, Iran and Kazakhstan.

The problem involved a long-standing dispute over ownership of a number of oil and gas fields in the Caspian Sea, including Dostluk.

In the Soviet era, this deposit was called Promezhutochnaya (Russian for "in between") because it is between Turkmen and Azerbaijani waters.

After the Soviet Union collapsed in 1991, Azerbaijan proposed jointly exploiting the wealth of the disputed area, but then-Turkmen President Saparmurat Niyazov never replied and was vehemently opposed to the proposition.

"Meanwhile, Azerbaijan started unilaterally extracting oil and gas from those fields, while Turkmenistan bombarded it with notes of protest and threatened to sue it in an international court," said Nurmyrat Sapayev, a former geologist of the Turkmen geological survey.

"The memorandum puts an end to a 30-year dispute, opens Turkmenistan up to new prospects of co-operation with Azerbaijan, and creates the conditions to diversify the export of Turkmen gas to Europe," he said.

Even as the squabble festered, Azerbaijan never expressed opposition to building a gas pipeline across the Caspian Sea, said Rovshen Khallyyev, an official at state-owned Turkmengaz (Turkmen Gas).

In addition, he said, Azerbaijan displayed willingness to provide its production infrastructure to pump at least 10 billion cubic metres of Turkmen gas per year to the European markets.

"This support was voiced by Azerbaijan's president as well as its minister of industry and energy [in 2012]," Khallyyev said.

"We were grateful when we found out that Azerbaijan was willing to provide us with pipe-laying vessels and other production equipment to create maritime infrastructure, because we didn't have any of that," he said.

Expanding Central Asia's reach

Azerbaijan -- which recently began selling gas to Europe via the Southern Gas Corridor (SGC) -- is, like Turkmenistan, interested in the TCGP and sees it as a key future component of the SGC, said Khallyyev.

The SGC began operating on the last day of 2020.

The SGC comprises the South Caucasus, Trans-Anatolian and Trans-Adriatic pipelines and is already presenting serious competition to Russia on the European gas market.

Turkmen gas could expand the capabilities of the SGC, say Ashgabat analysts.

"Right now, Azerbaijan is extracting gas for export to Europe from the Shah Deniz gas field, which has estimated reserves of 1.2 trillion cubic metres," Khallyyev said. "That's not much when you consider that the reserves of the Galkynysh gas field in Turkmenistan are 20 times greater."

"To feed the [TCGP], Turkmenistan has already built on its territory the 773km high-pressure East-West Gas Pipeline, which will deliver the volume of gas needed for export from ... Galkynysh in southeastern Turkmenistan to the coast of the Caspian Sea," he said.

The TCGP -- which the supplier, transit and consumer countries all want -- must be built, Khallyyev said.

Opposition from Russia, Iran

"The international dispute has been settled, a stumbling block between Turkmenistan and Azerbaijan has been removed, but there are still many more obstacles on the road to executing the project," said Sapayev, the retired geologist.

To succeed, the TCGP would require adequate demand from Europe and acceptable prices for Turkmen gas, he said, adding, "That has to concern us."

Another barrier to the TCGP is the joint Russian-Iranian opposition to the venture, he said.

Fearing competition in the gas market, the Russian and Iranian regimes have long opposed the supply of Turkmen gas to Azerbaijan and then to southern Europe via the TCGP.

To justify their position, Moscow and Tehran initially cited the lack of a treaty defining the five Caspian littoral countries' share of Caspian territory and resources. But after the countries' leaders signed the Convention on the Legal Status of the Caspian Sea in August 2018, Russia and Iran began saying that a gas pipeline would destroy the Caspian ecosystem.

Such protestations ring hollow, given Gazprom's indifference to the environmental costs of Nord Stream 2, the undersea pipeline to Germany that it is building.

The nearly complete project endangers migratory bird habitat and the climate, according to the NGO Deutsche Umwelthilfe (Environmental Action Germany).