Turkmen gas delivery to EU seems hard
Baku, Azerbaijan, May 6
By Dalga Khatinoglu- Trend:
While Europe says the Union is keen to start receiving natural gas from Turkmenistan by 2019, experts have doubt about its feasibility.
Natural gas rich Turkmenistan has ambitious plans to boost gas output from current 70 to 75 billion cubic meters per annum (bcm/a) to around 250 bcm/a by 2030, but it seems one of major challenges of Turkmenistan's energy supplying security is the diversification of gas routes.
For now, Turkmenistan, holding 9.4 percent of the world's total conventional gas reserves, exports gas to Russia, Iran and China.
Russia has decreased gas intake from Turkmenistan by 10 times during last years. Russian wants to import only 4 bcm of Turkmen gas in 2015.
Iran imported about 7.5 bcm of Turkmen gas in 2014 and is preparing to build a $4 billion worth, 1,100 km pipeline from South Pars to Turkmenistan borders to make the northeastern regions self-sufficient in gas demand.
It seems China would become Turkmenistan's major market. Ashgabat exported 25.9 bcm to China in 2014. That figure is expected to reach over 35 bcm in the current year while Turkmenistan has contracts with China to export 65 bcm/a of gas during next year.
The country's domestic gas consumption, especially in power sector is soaring, but much less than the projected gas production growth.
European Energy Commission Vice President Maros Sefcovic said in an interview with Reuters last week that for Turkmenistan it is very important to diversify its export options, while for the EU it is very important to diversify its imports. He said that EU expects supplies of Turkmen gas to begin by 2019.
He added that environmental risks of connected to the proposed pipeline (Trans-Caspian pipeline) could be mitigated.
Visiting Ashgabat on Friday, he met Turkish Energy Minister Taner Yildiz, Azerbaijan's Energy Minister Natiq Aliyev, Turkmen Deputy Prime Minister Baymurad Hojamukhamedov and Yagshygeldy Kakayev, who heads Turkmenistan's hydrocarbon resources agency.
"In this format we discussed all aspects referring to the trans-Caspian pipeline," Sefcovic said. "We made a big step in the strategic direction."
Trans Caspian project
Turkmenistan has tight principles in gas deals. It is neither involved in external pipeline projects nor obliges any probable gas disruptions abroad. It seems, the possibility of Ashgabat's participating in building the $5 billion worth Trans Caspian pipeline is very weak, while Iran and Russia are strongly against this project.
The position of Iran on the Trans-Caspian gas pipeline has not been in the affirmative, Iran's representative in Gas Exporting Countries Forum (GECF) board Mohammad Ali Khatibi told Trend May 6.
Iran's Ex-OPEC governor Khatibi stated in particular that the environmental risks of stretching the pipeline over the Caspian Sea bed are huge; therefore dismissing the prospects that doing so would be feasible.
Director of Hydrocarbons, France, Mediterranean Energy Observatory (OME) Sohbet Karbuz told Trend on May 6 that it (feasibility of the Trans-Caspian project) all depends how we interpret the word "feasible". Technically, yes, it is feasible. Financially, perhaps, not, but politically, it depends at which side one sits.
"Trans-Caspian pipeline is easier said than done simply because it involves more questions than answers. There are still considerable disagreements between the Caspian states regarding the legal status of the Caspian Sea and its future legal regime. Without settling that issue, the implementation of trans-Caspian pipeline is not feasible and hence would be a big headache".
"Turkmenistan is not interested in gas infrastructure abroad and wants to deliver gas to its border. There we have two options (if we leave the Russia option aside) -through Iran or across the Caspian Sea. The first option necessitates significant expansion in Iran's pipeline infrastructure (leaving the sanctions, and upstream developments aside) and the second one seems unlikely without settlement of the Caspian status issue," Karbuz said.
Hooman Peimani, Research Fellow at the Asia Pacific Energy Research Center, Tokyo told Trend May 6 that the Trans-Caspian Project has been floating around for a long time.
"It has not become a reality because it is a totally unrealistic project given its high cost as an offshore project, its environmentally destructive nature as an offshore project for the already highly-environmentally-damaged Caspian Sea and the opposition of both Iran and Russia".
In early March, Turkmenistan's Petroleum and Mineral Resources Ministry said the country announced that an active work is underway to supply from 10 to 30 billion cubic meters of gas per year to the European market.
The ministry said the RSK Environment Ltd. carried out the preliminary environmental studies upon the World Bank's order.
Peimani believes that the project has become even more unrealistic as Turkmenistan's export direction has shifted to China leaving no additional large-scale gas supplies for exporting to Europe. China's market can be accessed not through Russia, but its Central Asian neighbors. "Concerned about over-reliance on Russia for Turkmen gas export was the Trans-Caspian Project's main attraction for Turkmenistan, which is no longer an issue".
"The main reason for the project's attractiveness in Turkmenistan, i.e., increasing Turkmen gas exports, has been fading as Turkmenistan now has full access to China's large and growing gas market through the Central Asian Gas Pipeline whose Line D is under construction. By 2018 when all its four lines (A-D) will be fully operational, Turkmenistan, along with Kazakhstan and Uzbekistan, will export 85 bcm of gas to China of which the bulk (65 bcm) is its share," he said.
"China has additional contracts and, in fact, a growing need for imported gas to meet its gas requirements and decrease its dependency on coal, on the one hand, and expensive imported LNG, on the other. Hence Turkmenistan has practically a guaranteed rich and friendly market in its close proximity to exports its excess gas supplies to its domestic needs in the foreseeable future as a result of developing its new gas fields".
China's natural gas consumption is expected to exceed 550 bcm/a by 2030, however, the country will focus on boosting shale gas output to help meet rising demand, the China Securities Journal reported last October.
China consumed 168 bcm of gas in 2013.
Coming to Turkmenistan's gas export to EU, Karbuz said it would be quite wrong to look at the Trans-Caspian as just a pipeline. It is much more than that due to its possible implications, consequences and parties potentially involved.
"Political disagreements among the players are inevitable in the Caspian region and will surface once their interests and priorities clash. the signature of a five-way treaty to settle the legal framework seems unlikely, under the current political environment (here I mean more Russia than Iran). Since the players in the region have conflicting interests and priorities, the trans-Caspian pipeline project is likely to ignite conflicts of interest and a geopolitical competition between the different players."
Karbuz believes the EU's efforts to revitalize the Trans-Caspian pipeline in order to be able to import Turkmen gas is not new. It comes to the surface again, albeit with much more fever, after the Crimea crisis.
Edited by CN