When Maros Sefcovic, the European Commission vice president in charge of energy union, started talking about the Trans-Caspian Pipeline (TCP) project late last year, he rekindled many of the hopes and dreams that have been flickering embers for some 20 years.
Sefcovic’s visit to Turkmenistan at the end of April to discuss the gas pipeline across the Caspian Sea emphasized greater determination on the part of the European Union to see the project realized. His statement that Turkmen gas could reach the EU by 2019 indicated a seriousness not seen before.
But even if the EU has a new will to construct the TCP and tap into the resources of Turkmenistan, a country with the world’s fourth-largest gas reserves, many of the obstacles that have so far prevented billions of cubic meters (bcm) of Turkmen gas from reaching the European market still remain.
RFE/RL’s Turkmen Service, known locally as Azatlyk, assembled a panel to discuss the prospects for construction of the TCP and for shipping Turkmen gas to Europe.
Azatlyk Director Muhammad Tahir moderated the panel. The participants included:
-- John Roberts, a security and energy specialist and former editor at Platts Journal who was speaking from Turkmenistan, where he was participating in the sixth-annual International Gas Forum
-- Steve Levine, a noted authority on energy matters and the author of several books, among them The Oil And The Glory: The Pursuit Of Empire And Fortune On The Caspian Sea and the just-released The Powerhouse: Inside The Invention Of A Battery To Save The World
-- Paolo Sorbello, a researcher and journalist who specializes in energy issues, particularly Caspian Basin countries, and who has written for The Conway Bulletin, openDemocracy, Eurasianet, Milano Finanza, and L’Indro
I was also there but was content to listen to what the other three had to say.
First, the doubt.
The TCP project has been around since the mid-1990s. The idea is to build a pipeline across the bottom of the Caspian Sea to carry Turkmen gas to Azerbaijan, from there in pipelines through Georgia to Turkey and further on into Europe.
Turkmen President Gurbanguly Berdymukhammedov told Sefcovic that Turkmenistan is ready to supply Europe with gas. That statement is nothing new. That has been Turkmenistan’s position since the project was first pitched 20 years ago.
Levine recalled, “Turkmenistan itself has never had the confidence to sign a deal, to sign a real deal with one of the companies, with a group of companies to build that line” because of concerns about Russia.
Levine said Turkmenistan’s participation depends on “whether he (Berdymukhammedov) is willing to risk Putin’s wrath. Really, it's Russia that scares Turkmenistan and it's hard to understand how if Berdymukhammedov would not do this for 10 years, why now he would while Putin is on the warpath in Ukraine.”
Roberts followed that thought, pointing out, “I think that the problem the Turkmen face is they do not know what kind of protection they would get from the European Union or from anyone else if they were to go ahead with this project.”
There is another consideration.
Roberts noted, “The Turkmen official position is quite simply that anybody can build a pipeline to the borders of Turkmenistan and as soon as that pipeline is ready for use, they will supply gas for it.”
Gas companies such as Russia’s Gazprom or Azerbaijan’s SOCAR participate in building the export pipelines to their customers. Turkmengaz does not. Those who want Turkmen gas must build the pipeline to Turkmenistan to receive it.
Sorbello brought up the point that if the TCP is built, it is unclear how much gas Turkmenistan could realistically supply in the short- to midterm.
“We see now that they produce 100, 110, 120 bcm a year and from that, it would actually all go to export if all the projects that they have in mind are built,” Sorbello said, adding, “I don't see the possibility for Turkmenistan to basically double production.”
Estimates for Turkmen gas production this year are between 100 and 110 bcm, but domestic needs will consume somewhere between 22 and 25 bcm of that. Turkmenistan has contracts to ship some 80 bcm to China once the fourth and final pipeline of the branches connecting the two countries is completed, possibly as soon as late next year. Turkmenistan also supplies some 8 bcm to Iran and this year has an agreement to ship some 4 bcm to Russia.
However, the Turkmen government aims to produce some 230 bcm of gas by 2030 and export 180 bcm of that.
And on that positive note, it’s time to look at why the TCP could be built and start sending gas to Europe, according to Sefcovic's prediction.
It was agreed that, technically, the pipeline could be built by 2019. Roberts said, “If -- and it's a very big if -- but if the Turkmen were to sign export contracts, then there would be time to put the extra compression and build the extra looping on the pipeline for it to start in 2019 or 2020.”
He said Turkmen exports would initially be limited to some 10 bcm.
But Roberts illustrated how this was a better scenario for Turkmenistan, drawing attention to the offshore Turkmen field being developed by the Malaysian company Petronas. Petronas has 10 bcm of gas extracted from the Caspian Sea bed but nowhere to ship it.
“That gas is described publicly by the Petronas people as stranded gas. It's gas that has no real place [to go],” Roberts said, explaining that the offshore field, being much closer to Azerbaijan, does not require that the pipeline be built all the way to the Turkmen mainland to start contributing.
That still leaves Russia.
Levine said “Turkmenistan needs to figure out how to make it (TCP) beneficial and ultimately a profitable situation for Russia for that gas to go forward.” He reminded the panel that Turkmenistan was able to reach gas-export deals with China and “one of the factors was that the Chinese let Russian construction companies build a lot of the pipeline, so there was a profit motive."
The discussion was packed with information and touched on Iran, TAPI, and other issues in Caspian Basin energy politics.
The audio recording of the roundtable can be heard here:
-- Bruce Pannier