Trans-Caspian pipeline project: Caspian fantasy turns into reality?

Commentary Materials 6 December 2017 14:15 (UTC +04:00)
Trans-Caspian pipeline project: Caspian fantasy turns into reality?

Baku, Azerbaijan, Dec. 6

By Gulgiz Muradova - Trend:

Russian Foreign Minister Sergey Lavrov’s announcement over the Caspian Sea Legal Status has rekindled many of the hopes and dreams related to the Trans-Caspian pipeline project, that was being discussed for some 20 years.

Lavrov, following the Moscow meeting of the five Caspian littoral states on Dec. 5, said that the draft convention on the Caspian Sea legal status is ready and will be submitted to the heads of states at the Summit next year.

His statement that “we have almost completed the 20-year work on the convention on the legal status of the Caspian Sea” indicated a seriousness not seen before, but that may give a ‘green light’ to the long-awaited Trans-Caspian pipeline project.

The legal status of Caspian Sea, with huge hydrocarbon resources, has been under discussion since 1991, when Azerbaijan, Kazakhstan, and Turkmenistan gained independence following the collapse of the Soviet Union.

The Caspian states were mulling two possible options to determine the legal status of the Caspian Sea: delimitation using a mid-line modified method or division into 5 equal parts given each nation a 20 percent share. If the Caspian is legally declared a sea, all five littoral countries would map out their territorial waters and exploit the resources as they see fit.

The Caspian Sea legal status was named as the main obstacle on the way of the Trans-Caspian pipeline project (TCP) that would open up for Europe the resources of Turkmenistan, a country with the world’s fourth-largest gas reserves.

The TCP project has been around since mid-1990s. The idea was 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 onward Europe.

Turkmenistan has repeatedly stated that it is ready to supply Europe with gas, while the EU has never ceased its support to the project once even setting a firm date to get Turkmen gas.

Then the idea was dreamy enough for a number of reasons, most notably due to ecological concerns of some countries and lack of the Caspian Sea status.

Turkmenistan and Azerbaijan’s preference is to divide the Caspian Sea along existing national borders, and Russia opposes any undersea project backing its interest in delaying progress to avoid Gazprom’s defeat in Europe, while Iran also opposes the project given its hopes pinned on gas supplies to Europe.

Now, with the Caspian Sea legal status at least appearing closer to the resolution, the idea of Turkmen gas reaching European markets by the end of the decade appears to be real, even if not in this decade, but in the next one.

Better conditions exist today for bringing the Turkmen gas to Europe with the launch of the Southern Gas Corridor project, designed to transport gas from the Caspian region to European countries. As Europe views the TCP as a good chance to diversify energy supplies, its joining the Azerbaijan-initiated system of gas pipelines is just as real.

After the resolution of the main issues, Turkmenistan may feel confident to sign deal with companies to build the pipe through the Caspian seabed. The determination of the long-debated legal status may bring Turkmenistan one step closer to see its gas reaching the 'old continent'.

Turkmenistan’s recoverable reserves are estimated at 17.5 trillion cubic meters of gas or nine percent of total global reserves, which puts Turkmenistan fourth, after Iran, Russia and Qatar. In early 2016, Russia canceled gas import agreement with Ashgabat. Iran, is another buyer of Turkmen gas, but Ashgabat still needs to expand its export market.

Turkmenistan has contracts to ship gas to China, which is a huge market for the gas suppliers. So, dependence on one market is not in interests of Ashgabat, given that the Turkmen government aims to produce some 230 bcm of gas by 2030 and export 180 bcm of that volume.

Follow the author on Twitter:@GulgizD