Winter is coming on, and as I predicted here two months ago, not even a memorandum of understanding (MoU) or any agreement in principle was reached this autumn between the EU and Turkmenistan, for Europe to receive any natural gas in any form from the eastern shore of the Caspian Sea.
This failure has come despite a new pipeline-promoter company for the old project newly led by a former US ambassador to Turkmenistan.
It has come also despite the highly touted meeting between Turkmen President Serdar Berdimuhamedow and president of the European Council, Charles Michel, in Brussels in mid-September, also despite and the attendance of Turkmen Foreign Minister Rashid Meredow in an EU–Central Asia inter-ministerial meeting in Luxembourg in late October and his meetings with a number of European Commission officials.
Such a pipeline was on the drawing boards in the late 1990s, until BP discovered enormous quantities of natural gas in Azerbaijan’s offshore Shah Deniz deposit, where it had in fact expected to find crude petroleum instead.
The South Caucasus Pipeline (SCP) through Georgia to Turkey was then built, followed by the Southern Gas Corridor (SGC) stretching all the way from eastern Turkey to Greece and, via the undersea Trans-Adriatic Pipeline (TAP), to Italy. An agreement was recently reached to double the volume of the TAP from 10 billion cubic meters per year to 20 bcm/y. This can be done by adding compressor stations, without new construction.
The shore-to-shore Trans-Caspian Gas Pipeline (TCGP) could also have been built in the late 2010s, when the European Commission endorsed it as a Project of Common Interest (PCI). The problem here seems to have been that the Georgian government had already begun tilting geopolitically toward Russia, despite the Western orientation of the country’s electorate.
Moreover, it appears that para-statal Georgian companies (notably the Georgian Oil and Gas Corporation and its affiliates), which wished to preserve their monopoly on gas development and distribution, had already captured the country’s Energy and Development ministries.
Since Turkmen gas would have been competing in the European market with Russian gas (which Europe was still importing in large quantities at the time), the Georgian authorities seem simply to have quietly suppressed the TCGP project until the PCI designation expired after a few years.
Platform connection
So, most recently, the EU and the United States have instead tried once more to persuade Turkmenistan in favor of the so-called “platform connection” pipeline, between Turkmenistan’s and Azerbaijan’s offshore energy platforms already built in the middle of the Caspian Sea.
Such an interconnector could not carry more than 8-10bcm/y. Turkmenistan has rejected this idea repeatedly over the last 20 years, and this year it rejected it once again. Ashgabat has always insisted on the shore-to-shore TCGP, slated to carry 31bcm/y. Once again, this demand was not taken seriously, and failure ensued as in the past.
So what are Central and Southeastern Europe going to do? Of course, it is too late to do anything for the oncoming winter, or even next year’s winter; but it now looks like the implementation of the Solidarity Ring will proceed without obstacle.
First discussed in 2022, on the basis of the former EastRing project, its major difference from the latter was that EastRing had forseen new pipeline construction and an initial planned capacity of 20bcm/y, expandable to 40bcm/y.
The Solidarity Ring, by contrast, will focus on the upgrading and modernization of existing infrastructure, and construction of short interconnectors where needed, with an initial target of 5bcm/y and a view toward a possible expansion eventually to 20bcm/y. The hopes are that the Solidarity Ring will be open for business by the end of 2025.
The implementation of the project would lead to the connection of the existing key infrastructure on the territory of the Slovak Republic (connected to the western gas hubs), with the gas infrastructure on the territory of Hungary, Romania, Bulgaria, Turkey and Azerbaijan. In fact, the gas would almost certainly be sourced from Azerbaijan.
This project satisfies the EU’s policy goal, to strengthen the diversification of natural-gas transport routes and sources in the regions of Central and Southeastern Europe. These regions are historically highly dependent on Russian gas supplies.
The Solidarity Ring falls into the framework of the MoU on Strategic Partnership in the Energy Sector, signed in July 2022 between the European Commission and Azerbaijan. In April of this year, an MoU was signed in Sofia, Bulgaria, to support cooperation among operators of natural-gas transmission networks from Bulgaria, Hungary, Romania, Slovakia, and the Azerbaijani energy company SOCAR.
Line D pipeline
Meanwhile, Turkmenistan is benefiting from China’s new advancement of the long-delayed “Line D” pipeline, which would be the fourth export pipeline to China from the rich reserves in the southeast of the country. Line D is projected to carry 30bcm/y and was estimated in 2014 to cost US$6.7 billion, although the price of steel on the world market has nominally doubled since then.
In a parallel move, just this week, China, playing hardball with Russia, made it absolutely clear that Moscow would have to cover the construction and operation costs of the Power of Siberia 2 pipeline project, without advance payment from China for expected quantities to be received. Beijing is thus playing Turkmenistan and Russia off against one another.
From a standpoint of grand strategy, it is easy to see why China might prefer to prioritize the pipeline from Turkmenistan. It is strategically more valuable. In particular, it aligns with Beijing’s goals of expanding trade with Central Asia and ensuring stability in the Xinjiang Uighur Autonomous Region. Russia, on the other hand, in the face of Western sanctions, has little choice for its Siberian gas other than to export to China.
Nevertheless, importing gas from Turkmenistan has been costlier for China compared with Russian gas, since Turkmenistan has always sought payment aligned with global pricing practices.
This bilateral price negotiation will be tough. Yet at the same time, while China’s new contracts for imports of liquefied natural gas (LNG) from Qatar and the United States complicate such negotiations, they will do so only to Beijing’s advantage.