Trans-Caspian pipeline could solve Europe’s energy crisis

Trans-Caspian pipeline could solve Europe’s energy crisis

The Caspian region has approximately 292 trillion cubic feet of natural gas in reserve. (Google Maps)

Last week, the foreign ministers of Turkey, Azerbaijan and Turkmenistan gathered in Ankara for a trilateral meeting. Energy was the order of the day.
In the aftermath of Russia’s invasion of Ukraine, global energy markets are in disarray. Nowhere is this more acutely felt than in Europe. Over the years, the continent has failed to diversify its sources of oil and gas, while relying too much on renewable energy sources which remain expensive and less productive. This has led to an unhealthy reliance on Russian oil and gas, which gives Moscow the geopolitical advantage.
Now is the time for Europe to start looking for better options for its energy imports. Fortunately, there are plenty of opportunities, including North Africa, the Eastern Mediterranean, and even liquefied natural gas exports from as far away as the United States and the Gulf.
However, one area to which Europe should pay particular attention is the region around the Caspian Sea. That is why the meeting of foreign ministers of Turkey, Azerbaijan and Turkmenistan was so important.
The Caspian region has approximately 292 trillion cubic feet of natural gas in proven and probable reserves. It also has an extensive and reliable pipeline infrastructure that connects it to European markets.
However, an important piece of the Caspian energy puzzle remains missing: a Trans-Caspian gas pipeline linking Turkmenistan on the east coast to Azerbaijan in the west.
Turkmenistan is believed to have the fourth largest natural gas reserves in the world. A gas pipeline is the only economically viable way to transport natural gas across the Caspian Sea, because the alternative, turning it into LNG, is too expensive to transport such a short distance. Without a pipeline crossing the sea, there is therefore no cost-effective way to transport gas from Central Asia to Europe without passing through Russia.
The idea of ​​building a gas pipeline across the Caspian Sea has been debated for decades. However, there are four reasons why now is the time to finally build one.
First, Turkmenistan has run out of money. Ashgabat has relied too much on natural gas exports to too few customers, mainly Russia and China. The country is plunged into an economic crisis. International investors who might enter the country are reluctant to do so because little has been done to improve the business climate, privatize public industries or fight endemic corruption.
Turkmenistan’s greatest potential for redressing its dire economic situation lies in its energy resources. Former President Gurbanguly Berdimuhamedov recently handed over power to his son, Serdar. It remains to be seen whether he will adopt a more open approach to foreign investment than his father, but one thing is certain: Turkmenistan needs new sources of income and a Trans-Caspian gas pipeline could help it.

With Nord Stream 2 now dead, Europe looking for energy alternatives, Russia and Iran distracted, and Azerbaijan and Turkmenistan ready, now is the time to finally make this project a reality.

Luc Coffey

Second, Russia and Iran are distracted. Neither country, which are both Caspian coastal states, has backed the idea of ​​an undersea gas pipeline in the past. They both knew that would exclude them from any gas deal with Europe. However, neither of them is currently in a position to do much about a Trans-Caspian pipeline project.
Faced with economic sanctions, the Russian economy remains fragile. While popular support for war in Ukraine remains high at the moment, domestic unrest is likely to increase as sanctions begin to bite and the war drags on.

Iran also faces similar economic problems at home. President Ebrahim Raisi is facing mounting public protests across the country. Meanwhile, a new nuclear deal with the United States seems unlikely. Therefore, Moscow and Tehran are likely to have bigger issues to worry about than a Trans-Caspian pipeline.
Third, most of the infrastructure is already in place to bring gas from Turkmenistan to Europe. On the western shore of the Caspian Sea, the Southern Gas Corridor was commissioned in 2020. This network of gas pipelines, which stretches 3,340 km across seven countries, has the potential to supply 60 billion cubic meters of natural gas per year to Europe.
On the eastern shore of the Caspian Sea, Ashgabat has already built its so-called East-West Gas Pipeline, a 780 km gas pipeline connecting Mary province in the east with the country’s Caspian coast. It has the potential to transport 30 billion cubic meters per year.
Finally, most of the legal barriers to building a pipeline no longer exist. The Convention on the Legal Status of the Caspian Sea, signed by the five Caspian littoral states in 2018, allows the establishment of pipelines with the consent of only the countries involved in the project.
As mentioned above, Iran and Russia oppose the idea of ​​a pipeline and have therefore argued that any such project must first have the agreement of the five riparian states. The new convention could finally give the green light to a Trans-Caspian gas pipeline once the interested parties, in this case Turkmenistan and Azerbaijan, have reached an agreement.
The Caspian region has come a long way since its first pipeline was built in 1906. Today, there is an extensive network of pipelines carrying oil and gas. A Trans-Caspian pipeline, coupled with the Southern Gas Corridor, would alter the geopolitical landscape of the region and beyond.
With Nord Stream 2, a previously planned gas pipeline between Russia and Germany, now dead following the invasion of Ukraine, Europe in search of energy alternatives, Russia and Iran distracted, and with Azerbaijan and Turkmenistan ready, now is the time to finally make this project a reality.

• Luke Coffey is Director of the Douglas and Sarah Allison Center for Foreign Policy at the Heritage Foundation. Twitter: @LukeDCoffey

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