Europe’s Wait for Turkmen Natural Gas Continues
In response to the Kremlin’s activity in Ukraine, the European Union is moving to wean itself off Russian natural gas. While the move makes sound geopolitical sense, cutting off Russian gas supplies has already caused economic pain. Before the war, Russia supplied 40 percent of Europe’s gas. The European Union now aims to achieve energy independence from Russia by 2030. Moscow has retaliated by restricting gas flows to Europe and even shutting down the crucial Nord Stream 1 pipeline, sending energy prices soaring.
The European Union is now desperately searching for new sources of natural gas. Turkmenistan, with the world’s fourth largest gas reserves, would seem to be a possible supplier. The Central Asian country has been experiencing an economic crisis for some seven years and needs customers for its natural gas. But there is still no physical connection between Europe and Turkmenistan to ship the crucial commodity, and Turkmenistan’s repressive government has a poor human rights record. More importantly, Turkmenistan seems intent on privileging its ties with Russia and Iran over any potential market opportunities in Europe. As a result, there is no sign of urgency from Turkmenistan to export any of its gas to Europe anytime soon.
The Long Saga of Getting Turkmen Gas to Europe
The idea of bringing gas from Turkmenistan is not new. The proposal for a Trans-Caspian Pipeline dates to the mid-1990s. The European Union included Turkmenistan in its plans for a Southern Gas Corridor, part of which is already functioning, to transport gas from Azerbaijan’s Shah Deniz II field in the Caspian Sea across Turkey to the Trans-Adriatic Pipeline that supplies gas to Greece, Albania, and Italy.
The plan was for Turkmenistan to supply some 30 billion cubic meters (bcm) of gas annually, via a pipeline that ran along the bottom of the Caspian Sea to Azerbaijan, where it would be fed into the pipeline network leading through the Caucasus to Turkey. From there, the gas would be exported to Europe.
In 2021, the European Union imported some 155 bcm of gas from Russia, which was 39.2 percent of EU gas imports. Russia has the world’s largest proven gas reserves with 37.4 trillion cubic meters (tcm), Turkmenistan has 13.6 tcm (according to some sources 19 tcm), and Azerbaijan 2.3 tcm. Turkmenistan has enough gas to somewhat offset the loss of Russian gas to the European Union, but Turkmen gas needs to reach the west side of the Caspian Sea first—and this has been the major problem.
Russia and Iran have continually opposed the construction of the Trans-Caspian Pipeline. Both countries cite environmental concerns, but some believe this rationale masks commercial concerns. The Kremlin, naturally, did not want Turkmenistan cutting into Russia’s share of the European gas market. Iran was similarly blocking what could be a competitor’s project should the time come when international sanctions on Tehran for its nuclear program were lifted. With the world’s second-largest gas reserves (32.1 tcm), Iran would be able to export to Europe via a much easier land route.
When the leaders of the Caspian littoral states met in Aktau, Kazakhstan, in August 2018, they signed the Convention on the Legal Status of the Caspian Sea. It should have cleared up obstacles to the construction of the Trans-Caspian Pipeline, but it did not. The convention states:
Parties may lay trunk submarine pipelines on the bed of the Caspian Sea, on the condition that their projects comply with environmental standards and requirements embodied in the international agreements to which they are parties, including the Framework Convention for the Protection of the Marine Environment of the Caspian Sea and its relevant protocols.
This language gives Russia and Iran a say on environmental standards and requirements for the construction of a pipeline between Turkmenistan and Azerbaijan. As a result, the convention did little to change the status quo that existed before the signing of the document.
Recent signs indicate Turkmenistan does not intend to press that point.
Turkmen-Russian Ties Stay Close
On March 12, 2022, Serdar Berdymukhammedov was elected Turkmenistan’s president, taking over from his father Gurbanguly Berdymukhamedov, who had held the same position since 2007. Serdar’s first official trip as president was to Russia on June 10. Russian President Vladimir Putin had already awarded Serdar the Order of Friendship in May for his “great contribution to strengthening the strategic partnership between the Russian Federation and Turkmenistan.”
When the Turkmen and Russian presidents met in Moscow in June, Putin said, “Russia and Turkmenistan attach great importance to joint work with the Caspian states in the field of security, economic partnership, conservation of natural resources and maintenance of environmental well-being.” Putin’s choice of words indicates that Russia’s opposition to the trans-Caspian pipeline for ostensibly environmental reasons.
Russia’s influence over Turkmenistan has been growing in recent years. As a result of its long international isolation, Turkmenistan does not have strong allies to whom it can turn.
Turkmenistan’s economy is based on gas exports, which are believed to account for 80 percent or more of state revenues, though that remains unclear as Turkmen authorities rarely publish figures, and even when they do, the figures tend to stretch credibility.
Russian state gas company Gazprom suspended imports of Turkmen gas at the start of 2016, after years of disputes over pricing that saw Russian imports of Turkmen drop from more than 40 bcm in 2008, to some 4 bcm in 2015.
With Turkmenistan’s economy continuing its steep decline and no relief in sight, Gazprom agreed to resume gas purchases in 2019. Supplies were modest—only some 5.5 bcm in 2019—but the money was a lifeline for the Turkmen government. In 2021, Russia increased imports to some 10 bcm of Turkmen gas. Gazprom chief Aleksei Miller visited Turkmenistan on August 29, meeting separately with President Serdar Berdymukhammedov and his father. Miller discussed gas purchases with Serdar, but reports did not mention if there was any new deal.
Three days before Miller’s visit, Moscow announced that Russian President Vladimir Putin was awarding Gurbanguly Berdymukhammedov the Order of Merit for services to the Fatherland.
The Turkmen government has not said anything about Russia’s war on Ukraine, but there are indications that Turkmenistan is more interested in its relations with Russia than in joining efforts to isolate Moscow. In late March, as international sanctions on Russia were starting to bite, Turkmen farmers and businesses received orders to increase food exports to Russia, despite the fact there are shortages of basic goods in Turkmenistan.
And Serdar Berdymukhammedov has a personal connection to Russia. He attended the Russian Foreign Ministry’s Diplomatic Academy from 2008–2011 (and was simultaneously a counselor at the Turkmen embassy in Moscow).
Improving Relations with Iran
For his second trip as Turkmenistan’s president, Serdar traveled to Iran on June 14. Iranian-Turkmen relations have also been improving recently after they plummeted at the start of 2017 when Turkmenistan cut off supplies of gas to northern Iran, citing non-payment of a decade-old bill of some $1.8 billion. Northern regions of Iran are still poorly connected to the country’s energy grid and Turkmen gas was essential to keep the regional economy going.
The two countries are now close to settling the debt. Turkmenistan and Iran have also been talking about resuming gas shipments and boosting an existing swap arrangement whereby Turkmenistan has been shipping 1.5 bcm to 2 bcm of gas to northern Iran, and Iran sends a like amount to Azerbaijan, for which Azerbaijan pays Turkmenistan.
Turkmenistan started exporting electricity to Iran in 2003 but supplies have been disrupted several times due to disagreements between the two governments. Turkmenistan resumed electricity exports to Iran in June 2021. Later that year, during Turkmen Foreign Minister Rashid Meredov’s visit to Tehran, the two countries signed an agreement for the construction of a 400-kV transmission line to increase Turkmen electricity exports to Iran.
Turkmen representatives have also enquired about the possibility of exporting electricity through Iran to third countries.
Turkmenistan’s Geopolitical Choice
Europe desperately needs new sources of cheap natural gas. Serdar Berdymukhammedov’s choice of Moscow and Tehran for his first two foreign visits as president is an indication of Turkmenistan’s foreign policy direction. The repressive Central Asian state will likely maintain its ties with Russia and deepen cooperation with Iran while keeping the West at arm’s length.
Turkmenistan would risk souring relations with Russia and Iran if it ever constructed the Trans-Caspian Pipeline, making it unlikely that Europe will see Turkmen gas any time soon.