Europe Looks to Turkmenistan to Expand Southern Gas Corridor

European energy security policy reached a milestone in early June when the Trans-Anatolian Natural Gas Pipeline (TANAP, after its Turkish initials) was opened. As the name indicates, the pipeline runs east-west across Turkey (1,850 kilometres) from the Georgian to the Greek border.

 

It will carry, in the first instance, natural gas from Azerbaijan’s Shah Deniz Two gas field offshore in the Caspian Sea, which will reach TANAP through the already existing South Caucasus Pipeline (SCP).

 

Opening with 6 billion cubic meters per year (bcm/y) of natural gas for Turkey, TANAP’s volume will increase to 16 bcm/y next year after the Trans-Adriatic Pipeline (TAP) opens. The TAP will run from the TANAP junction across northern Greece and Albania, then under the Adriatic Sea to southern Italy, where the additional 10 bcm/y will land.

 

It is suggested that capacity may ramp up to 24 bcm/y by 2023. Since both TANAP and TAP are opening ahead of schedule, it is not impossible that that date is moved up. It is likewise suggested that capacity in 2026 may increase yet again, to 31 bcm/y.

 

However, the Advisory Council of the Southern Gas Corridor (SGC) has not indicated the specific source or sources for those volumes. It has only mentioned a broad choice of possibilities. Therefore, the prospective volumes given for 2023 and 2026 are not a firm plan. They merely indicate the technical possibilities of expanding the infrastructure.

 

The opening of the TANAP-TAP system also represents the formal opening of the SGC’s first stage. But it is not expected that the projected additional volumes may come from Azerbaijan anytime soon. The best candidate to supply them is Turkmenistan.

 

The European Union is actively supporting the project to construct the Trans-Caspian Gas Pipeline (TCGP), which would take Turkmenistan’s gas under the Caspian Sea to Azerbaijan. From there, it would enter the SCP-TANAP-TAP system for transit to Europe.

 

Technically the project is easy, but politically it has been difficult. An attempt led by American companies foundered 20 years ago when Turkmenistan and Turkey, and then Turkmenistan and Azerbaijan, were unable to agree. While they were still discussing terms, the Russian-Turkish Blue Stream pipeline project took off, and the Shah Deniz project operator BP discovered that that deposit held mainly natural gas rather than the crude oil that they expected to find. So Azerbaijan helped develop the SCP for the Turkish market without an export quota for Turkmenistan.

 

The leaders of Azerbaijan and Turkmenistan from that time passed from the scene a decade ago. The new leaders reconciled and made mutually accommodating noises, but still, the TCGP was never built for a series of idiosyncratic reasons. Now that has changed.

 

Amongst other recent developments, the European Commission has confirmed the TCGP as one of the EU’s Projects of Common Interest. This action qualifies the pipeline for financial support. At the SGC opening ceremony in Baku in June, executives of the State Oil Company of the Azerbaijani Republic (SOCAR) clearly stated that they believed the TCGP was now a real possibility and that they were ready to realize it. Remarks made by U.S. Deputy Assistant Secretary of State Sandra Oudkirk showed American support as well.

 

For years, Russia and Iran sought to block the project by asserting that all five Caspian littoral countries (the other, besides Azerbaijan and Turkmenistan, is Kazakhstan) had to approve the laying of pipelines on the bed of the Caspian Sea. In fact, the legal status of the Caspian Sea has been undefined since the Soviet Union collapsed.

 

But now, after more than 20 years of negotiations, it is announced that the five littoral countries will sign a Convention on the Status of the Caspian Sea on August 12. This Convention will confirm the right of any country to lay pipelines and cables on its section of the seabed. Since the Azerbaijani and Turkmenistani sections are contiguous, the two countries need no one else’s approval.

 

The EU has been facilitating talks between them since 2011. In June 2017, the Council of the European Union reconfirmed the EU’s intention to extend the SGC into Central Asia. In August 2017, Azerbaijan and Turkmenistan issued a joint public statement (the first between them ever of its kind) declaring their intention in common, to work together to bring gas from Turkmenistan to Europe.

 

Since March 2018, the European Commission is funding the Pre-FEED, Reconnaissance Surveys and Strategic and Economic Evaluations of the TCGP. (“FEED” is a technical abbreviation for “Front-End Engineering and Design”.) All supposed obstacles to the planning and construction of the pipeline are now falling away.

 

There will in fact be two parts, or “strings”, to the TCGP. Gas from the first (carrying 16 bcm/y) will run as described, under the Caspian Sea and into the SCP-TANAP-TAP system to Italy. The second (carrying another 16 bcm/y) will cross Azerbaijan and Georgia to run under the Black Sea, through the projected White Stream pipeline to Romania.

 

Gas transiting the second string will then flow north through the Trans-Balkan Pipeline and the Ukrainian gas transmission system to Poland, as well as through the existing Bratstvo pipeline to Slovakia, Hungary and Czechia into Germany.

 

Together with the TANAP-TAP system, the TCGP and White Stream projects meet the EU’s desired criteria of creating competition, integrating markets, and enhancing the security of supply and diversification. They will increase the transit capacity of the EU’s Eastern Partnership countries Azerbaijan, Georgia and Ukraine, as well as stimulate economic growth in the latter two.

 

As European Commission Vice-President, responsible for the Energy Union, Maroš Šefčovič has remarked on more than one occasion, White Stream and TCGP complement the SGC by increasing the volumes of gas that can be transited to Europe. White Stream especially will create new paths, via Romania, for gas to reach Central and Eastern Europe.

 

White Stream will also support new European infrastructure such as the Bulgaria-Romania-Hungary-Austria pipeline (BRUA, “U” for “Ungaria”). Perhaps even more important, it will ensure the utilization of Ukraine’s gas storage facilities after the contract between Russia’s Gazprom and Ukraine’s Naftogaz expires. In this way, the TCGP and White Stream in particular are crucial for European energy security, whether the Russian-sponsored Nord Stream Two pipeline is built or not.

 

Through a connection with Azerbaijan, Turkmenistan will finally find its place in the Euro-Caspian energy complex. Every effort is being made and should be made, to implement the extension of the SGC to Central Asia, and Turkmenistan in the first instance. In the more distant future, natural gas from Kazakhstan’s offshore Kashagan deposit may also be targeted for export to Europe.

Photo: Gas Flame (2017), by Ratfink1973 via Pixabay. Licensed under CC0.


Disclaimer: Any views or opinions expressed in articles are solely those of the authors
and do not necessarily represent the views of the NATO Association of Canada.

About Robert M. Cutler

Robert M. Cutler earned his doctorate at The University of Michigan after receiving two Bachelor's degrees from the Massachusetts Institute of Technology. After over a dozen years in leading universities in Canada, France, Russia, Switzerland and the United States, he expanded into policy analysis and consulting as an Energy Security and Geo-economics Specialist. He has over 20 years' experience in international energy diplomacy: advising energy firms, governments, international institutions and NGOs; framing policy and research issues and leading teams to address them, and producing briefings and analytical bulletins. He has published scores of refereed academic articles, policy articles and book chapters. He is a Fellow of the Canadian Energy Research Institute and a senior researcher at Carleton University's Institute of European, Russian and Eurasian Studies. He is fluent in English, French and Russian. He can be reached at rmc@alum.mit.edu and tweets from @RobertMCutler.