When Turkmenistan’s President Gurbanguly Berdimuhamedov held talks in Berlin on August 29, 2016, there was one major energy subject on his mind: how to find a way to get Turkmen gas flowing to European markets.
It’s a subject that has exercised Turkmen and EU officials for more than a decade, but it really does seem as if, finally, Turkmenistan’s leader is trying to break the log-jam. But he faces a tough task.
The problem is that what Brussels and Ashgabat have long wished to achieve – the development of a system that could carry as much as 30-40bn m³/yr of Turkmen gas to European markets – is simply not attainable under current conditions, not least since it would require the installation of major new infrastructure costing tens of billions of dollars to connect Turkmenistan production with core consumption in western Europe. It would also antagonize Moscow, since it would pose a major commercial challenge to Russian gas on European markets.
What might be achievable, however, is a much more modest programme that would enable gas from Turkmenistan’s Caspian fields to access Azerbaijan’s existing domestic and export systems by means of a link between existing offshore facilities in the two countries.
«We in Turkmenistan are interested in delivering our energy resources to the West,» Berdimuhamedov said during the press conference with Angela Merkel. More importantly, he added that the Turkmen government had presented the European Commission with proposals for how to proceed and that Turkmenistan and the European Commission were jointly working on legal and technical issues.
The imperative for Turkmenistan is overwhelming. At present, China is the only cash destination for Turkmen gas exports. Last year Turkmenistan did sell 7.2 bln m³ to Iran, as well as 27.7 bln m³/yr to China, but the Iranian sales were largely conducted as barter. Since Russia ceased to purchase Turkmen gas last year – and purchase may not be quite the right word, as the Turkmens say Gazprom did not pay them for the 2.8 bcm of gas they supplied – Ashgabat has no alternative market to help it become a price maker, rather than a price taker.
In an ideal world it would like to sell its gas to India and Pakistan. In commercial terms, this would make a lot of sense which is why Ashgabat has pursued the project of a Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline so assiduously for close to 20 years. In this context, Berdimuhamedov’s visit to Berlin may constitute an acknowledgement that henceforth the focus has to be on getting Turkmen gas to Europe, because, under current security conditions in Afghanistan, it is simply impossible to raise the kind of finance needed to develop TAPI, a project estimated to cost in excess of $10 bln for a 1,680-km, 33 bln m³/yr system.
In the last 2 years there have been intense efforts by Azerbaijan to see whether Turkmenistan would be interested in a relatively modest connection between the two states, whose coasts on either side of the Caspian are less than 300 km apart. Commercial sources in Baku say both Baku and Ashgabat are seriously exploring the possibility of a connection between Turkmenistan and Azerbaijan’s offshore installations but add that while these discussions have borne some fruit, there are still obstacles to be overcome.
Even developing a Turkmenistan-Azerbaijan field connector will not be easy. But if such a system were to be develop, it would enable at least some Turkmen gas to enter European markets.
Turkmenistan and Azerbaijan will need partners to ensure such a development. That’s why Berdimuhamedov has been visiting Berlin, and that’s why he said at the August 29 press conference that «we believe that Germany as a respected and authoritative member of the European Union will further provide support to this process.»
As for the German Chancellor’s own thoughts on the matter, she commented simply at the press conference: «I hope the problems that still exist can be overcome.»
Author: John Roberts
