The Trans-Caspian Gas Pipeline is back on the drawing board, but it is unlikely to provide any gas to Europe. After the failure of the second attempt to realize the project in the late 2010s – due in part to the domestic political influence exercised by the inherited Soviet-era monopoly Georgian Oil and Gas Corporation (GOGC) – it seemed as though the TCGP had swung and missed again.
The one previous attempt to construct it was in the late 1990s. It fell afoul of two circumstances.
The first was the agreement on the Blue Stream pipeline, which provided gas to Turkey (which the TCGP might have done) from Russia under the Black Sea. The second was the unexpected discovery of large volumes of gas instead of oil in Azerbaijan’s offshore Shah Deniz deposit. These volumes made it unnecessary to rely on gas from Turkmenistan to fill a pipeline from Azerbaijan westward to Europe.
It is worth mentioning the attempt to construct such a large-volume pipeline in the late 2000s. This was the Nabucco project, which would have run from the South Caucasus to the Baumgarten gas hub in eastern Austria. This gas, however, was planned to come mainly, if not exclusively, from offshore Azerbaijani sources that had recently been discovered and others (such as Shah Deniz) that were projected for expansion.
It is a sign of the difficulties of trans-Caspian gas that the TCGP was not considered as part of this scheme, which included the European Union’s attempt to create a Caspian Development Corporation (CDC) to aggregate demand from European gas companies.
However, that demand turned out not to exist, because the major European companies that were concerned had other suppliers – including Gazprom – and the CDC institutional design was poorly done.
Pipeline plan resurfaces
Now for some time there has been talk once more of a TCGP. This is not, however, the shore-to-shore fully fledged 31 billion cubic meters per year (bcm/y) pipeline originally envisaged 25 years ago. It is a smaller, shorter pipeline from Turkmenistan’s offshore gas-production platforms to Azerbaijan’s offshore gas-production platforms.
First proposed soon after Turkmenistan’s first president Saparmurat Niyazov died in 2006, with a volume of 10bcm/y, it might have become part of the just-mentioned project in the late 2000s.
Turkmenistan has never endorsed this project. If Turkmenistan had ever wanted to build this smaller pipeline, it could have done so any time in the last 15 years. For reasons both of policy and prestige, however, it has held out for the full-fledged shore-to-shore 31bcm/y pipeline.
However, diplomatic and other disagreements between Turkmenistan and Azerbaijan, Russia’s military dominance of the region, and the lack of a treaty defining the legal status of the Caspian Sea all combined to block the project.
It is this project that has now resurfaced over the past year or two, under the sponsorship of an initiative organized by the former (2014-19) US ambassador to Turkmenistan Allan Mustard, who has formed the private Florida-based company TransCaspian Resources Inc for the purpose.
The estimated volume for this smaller pipeline would be 8-10bcm/y. The offshore Turkmenistan deposit is developed by the Malaysian firm Petronas and is no longer “stranded” but is instead piped onshore into the Turkmenistan domestic gas distribution system.
Turkmen President Serdar Berdimuhamedov completed a working visit to Hungary this summer, where an agreement in principle on gas imports was reached. However, Hungarian Foreign Minister Péter Szijjártó insisted that this concerned construction of the original shore-to-shore 31bcm/y pipeline. This implies a reanimation of the old Nabucco project with its pipeline to Austria.
That shore-to-shore pipeline is the one about which Szijjártó made his public statement. It would require whole new infrastructure from Azerbaijan to Europe running parallel to the existing Southern Gas Corridor. Work would also have to be done in Southeastern and Central Europe for the gas to reach consumers.
Turkmenistan already completed some years ago the East-West Pipeline (EWP) across the south of the country from its major gas deposits there. Some technical work remains to be done in order to prepare it for gas transit, for example most likely the installation of compressors.
The EWP nevertheless itself exists and its terminus is not far from the coast of the Caspian Sea. The construction of the fully fledged shore-to-shore TCGP itself is technically easily, as it is only 300 kilometers long and can be laid across a well-known shallow underwater ridge between the two countries. It would be the way for Europe to receive 31bcm/y of gas from Turkmenistan.
It is therefore telling that only days after Hungary’s non-binding memorandum of understanding with Turkmenistan for future gas imports, Szijjártó also signed similar MoUs with Azerbaijan and Turkey for similar quantities of gas imports. These countries are much closer and already export gas to Europe. Their domestic petrochemical industries are well developed and highly technically competent, in contrast with Turkmenistan’s.
It is expected that this autumn Berdimuhamedov will visit Brussels, where the EU leadership will seek to persuade him in favor of the shorter and lower-volume American “platform connection” project. One should not expect anything to come from this. It is Azerbaijan that will supply Europe’s gas from the Caspian Sea region for the foreseeable future, and in increasing quantities.