Europeans to Work on Caspian Gas Exports

The European Commission is exploring ways of setting up a Caspian Sea development corporation which would facilitate purchases of Turkmen gas.

In an interview for the Russian news agency Rosbalt in December, Simon Pirani, a senior researcher at the Oxford Institute for Energy Studies, said a commission had been set up in Brussels to look at how a viable corporation could be established to buy Turkmenistan’s gas on behalf of all European customers.

"Officials from the European Commission and interested companies hope this will meet Turkmenistan’s insistence on guaranteed demand for gas," Pirani said. "This resolve one of the problems currently standing in the way of building a trans-Caspian pipeline." 

Turkmenistan has traditionally been reliant on Russia, through whose pipeline network it exports its gas. But its efforts to find alternative routes have resulted in a new pipeline to China and plans for pipelines south through Afghanistan and west to Azerbaijan and on to European markets. 

The Europeans, too, are interested in Turkmen gas, which would come via a planned pipeline through Turkey called Nabucco. However, getting the gas there would require a new pipeline to be laid under the Caspian to Azerbaijan, a costly, technically difficult and legally complex project given the unresolved status of the sea.

In addition, the Turkmen authorities want firm pledges of future purchase volumes before going ahead with plans for exports to Europe.

In late November, Deputy Prime Minister Baimurad Hojamuhamedov, who is responsible for energy matters, told an oil and gas forum in the Turkmen capital Ashgabat that the country was prepared to deliver 40 billion cubic metres of gas a year to Europe.

Russia, whose energy giant Gazprom purchases Turkmen gas, transports it through its pipeline network, and re-exports it to Europe, has no desire to see the Central Asian state selling fuel to the same consumers independently. But falling market demand has led Gazprom to cut its purchases, reducing Moscow’s leverage in Ashgabat. 

The disputed status of the Caspian Sea is another obstacle for Turkmenistan and plans for an underwater pipeline. Nevertheless, President Gurbanguly Berdymuhammedov told a summit of Caspian leaders in November that the pipeline could be built with only a bilateral Turkmen-Azerbaijani agreement in place and regardless of the views of the other littoral states, Russia, Iran and Kazakstan.

NBCentralAsia commentators say Turkmen leaders are well-disposed to the idea of a corporation that would facilitate both gas exports and the trans-Caspian pipeline.

"The authorities are expecting someone to offer them sustained purchases of gas at market prices, or a solution for the trans-Caspian pipeline that gets round objections from Russia and Iran," a political analyst in Turkmenistan said. 

Rovshan Ibrahimov of the Energy Research Centre in Baku, Azerbaijan, agrees that one of the tasks the Caspian development corporation would have to take on is pushing through a pipeline deal and handling problems with Moscow.

An employee of the national oil and gas firm Turkmenneftegaz said the authorities would prefer it if the European Union, Russia and Iran battled it out over the proposed pipeline without involving them.

Another commentator in Ashgabat, however, said the corporation would not be able to act as dispute arbitrator and would only play a consultative role.

This article was produced as part of IWPR’s News Briefing Central Asia output, funded by the National Endowment for Democracy.