Europe Aims to Import Gas from Turkmenistan by 2020

A senior European diplomat has stated that the European Union intends to become an importer of Turkmen gas within the next three years. Christian Berger, the EU representative for Turkey and Turkmenistan, mentioned in an interview with 'Caspian Energy' magazine that Europe has begun negotiations regarding the import of Turkmen gas and hopes that by 2020, gas from this country will reach Europe via the 'Southern Corridor' gas pipeline. The Southern Corridor, which is 3,500 kilometers long, will connect Azerbaijan's Shah Deniz gas field in the Caspian Sea to Italy. This pipeline will pass through Georgia, Turkey, Greece, and Albania, with a total investment of nearly $40 billion, most of which has already been completed, and it is expected to be operational in the second half of 2020 with an annual capacity of 16 billion cubic meters of gas. The final capacity of this pipeline is 31 billion cubic meters per year, but to reach this capacity, pressure boosting stations and new gas sources are needed, which could come from Turkmenistan, Iran, Iraq, Egypt, and even Israel. Mr. Berger stated that Europe intends to assist Turkmenistan in diversifying its gas export markets. Russia cut off gas imports from Turkmenistan in early 2016. Ashgabat also halted gas sales to the Islamic Republic earlier this year due to a $1.8 billion debt owed by Iran, and now China is the only customer for Turkmen gas, receiving over 30 billion cubic meters annually. Ilham Shaban, director of the Caspian Oil Studies Center in Azerbaijan, stated in an interview with Radio Farda that several conditions must be met for Turkmen gas to be exported to Europe. He noted that Iran and Russia oppose the construction of a pipeline from the Caspian Sea by Turkmenistan, and although Iran has been receiving Turkmen gas under a swap agreement for over a year, Iranian officials have repeatedly stated that they only wish to conduct gas swaps with the Caucasus region, not Turkey and European markets. Mr. Shaban further explained that both the stakeholders of the 'Southern Corridor' pipeline and European gas purchasing companies must sign transit and purchase contracts with Turkmenistan, which has not yet occurred. He added that while Turkmenistan is the fourth largest holder of gas resources in the world after Iran, Russia, and Qatar, most of its gas reserves are located in the east of the country, which is a thousand kilometers away from the Caspian Sea. 'If we also consider the width of the Caspian Sea, at best, the distance from Turkmen gas fields to Italy is about 5,000 kilometers, and the cost of gas transit will be very heavy; thus, Turkmenistan must sell its gas at such a low price that it can compete with other exporters in Europe. Russia is the largest gas exporter to Europe, expected to sell 190 billion cubic meters of gas to the EU this year, which is more than one-third of the EU's total gas consumption. After the Ukrainian civil war, Russia's intervention, and the annexation of Crimea in 2014, Europe and the US imposed sanctions against Russia, and the EU intends to reduce its dependence on Russian gas. Ilham Shaban stated that in this context, the Southern Corridor pipeline was constructed quickly, but it is difficult to compete with Russia in European markets. 'Russian gas prices in European markets are low. This country is also constructing the 'Turk Stream' pipeline, which is expected to be completed by 2019 and will transport 31 billion cubic meters of gas to Europe via the Black Sea and Turkey. Russia is also negotiating with Europe to build a 'second Nord Stream pipeline' for the direct annual export of 55 billion cubic meters of gas to Germany. The first Southern Stream pipeline with the same capacity has been operational for years. Russia also sells its gas to Europe through Ukraine.' Mr. Shaban mentioned that Turkmenistan has several small gas fields in the Caspian waters that could connect via a short pipeline to Azerbaijan's oil and gas fields in the Caspian Sea, but the volume of gas delivered would not be significant. He stated that billions of dollars in investment would be needed to construct pressure boosting stations in the Southern Corridor for the transfer of Turkmen gas.