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Turkmenistan, Azerbaijan, Turkish Leaders to Meet for Gas Talks

Turkmenistan, Azerbaijan, Turkish Leaders to Meet for Gas Talks Energy

Turkmenistan, Azerbaijan, Turkish Leaders to Meet for Gas Talks


A high-level meeting reportedly set to take place later this year in Turkmenistan could put talk of building a natural gas pipeline across the Caspian Sea back on the agenda.

The Associated Press on July 23 cited Turkey’s ambassador to Turkmenistan, Mustafa Kapucu, as saying that the presidents of his country, Turkmenistan and Azerbaijan will meet to discuss the issue. The talks pick up from the EU-brokered Ashgabat Declaration of May 2015, which was signed by the energy ministries of the three countries and set down objectives like creating a legal framework for gas sales by Turkmenistan to Europe and “[developing] constructive dialogue” on the required infrastructure.

The fact that heads of state are set to sit around the table presumably suggests all the governments involved envision a transition from preliminary paper-shuffling to some concrete breakthrough, although experience teaches that this may not be the case.

The resurgence of interest in trans-Caspian would come at a timely juncture for Turkmenistan, which is now reduced to selling almost all of its gas to China. A small if growing amount if being sent to neighboring Iran.

Diversification of export routes has long been an article of dogma for Turkmenistan, and yet it has exasperatingly seen only a reduction of its international markets in recent years. Its erstwhile main customer Russia bought 45 billion cubic meters of gas in 2008, but that has through a series of commercial and diplomatic vicissitudes dwindled to nothing.

Since gas is so important to Turkmenistan, many have surmised that the country’s economy is performing far worse than the government officially allows for.

The trans-Caspian is also relevant in the context of the interminable iterations of the Southern Gas Corridor, a cover-all term describing the energy resources “modern Silk Road” linking the Caspian region to Europe. Historically, the underlying agenda of such projects has been to reduce Russia’s dominant presence on Europe’s gas market.

But as the Oxford Institute for Energy Studies, or OIES, explains in detail, Azerbaijan on its own looks unable to meet its rising internal and external demand contemporaneously, leaving a potential shortfall in the proposed Trans-Anatolian Pipeline, or TANAP, to be filled by Turkmenistan, or even Iran now that the sanctions regime is being dismantled. Other prospective suppliers could theoretically include Kazakhstan and Iraq.

OIES highlights how an informal trans-Caspian could have already taken shape, but for some inconveniences.

“[Azerbaijan and Turkmenistan] have discussed a scheme under which Azerbaijan would take 3-5 bcm of associated gas from Petronas, which produces oil under a PSA in the Turkmen sector of the Caspian, Petronas currently delivers these volumes to its gas processing plant at Kianly in Turkmenistan, but has been unable to reach agreement with Turkmengaz to sell them either in Turkmenistan or via export. Azerbaijani officials have suggested a scheme under which the gas would be piped back across the Caspian Sea as far as the ACG field, and from there use existing infrastructure to reach Azerbaijan,” researcher Simon Pirani wrote in the report.

One market expert in Azerbaijan has suggested Petronas could eventually double its annual gas output from its Caspian concession from the current 5 billion cubic meters to 10 billion cubic meters.

That proposed work-around was scuppered before it could get far, however, over objections from Turkmenistan and, Pirani suggested, resistance from Russia and Iran.

Ashgabat’s unhappiness was likely motivated by the possibility that it would not stand to profit directly in any substantial way from the arrangement. If there is to be a trans-Caspian route, Turkmenistan will use it to sell its own onshore gas and rake in the profits all for itself, hence the insistence on inclusion in all official documents of language about “equal and mutually beneficial cooperation.”

The question that never seems to be addressed in all this is: who is going to pay for all this? Washington is known to be a very eager supporter of the project, but its analogous enthusiasm for Turkmenistan’s other ambitious export route — the Turkemistan-Afghanistan-Pakistan-India pipeline, or TAPI — has not to date translated into serious financial commitments from any interested parties.

The Trans-Caspian might not be as fraught as TAPI security-wise, but the diplomacy remains tricky.

Sister blog The Bug Pit reported recently on the glimmer of a breakthrough on that front, but the progress would have to come reasonably soon if Turkmenistan is to get to the front of the line.



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