Russia pushing Turkmenistan to European gas market

Russia pushing Turkmenistan to European gas market
22:07 8 Yanvar 2016
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Baku, Azerbaijan, Jan. 8

By Elena Kosolapova – Trend:

Russia has completely stopped buying gas in Turkmenistan since January 2016. This can stir this Central Asian country’s interest in the European gas market.

Russia's decision was expected. The export of Turkmen gas to Russia decreased tenfold over the past decade. Russia bought about 41-42 bcm a year from Turkmenistan in 2006-2008. The import has dropped to 10 bcm a year since 2010. The Russian Gazprom announced about the reduction of the Turkmen gas purchase by more than twofold - up to 4 bcm per year in 2015.

But even these supplies were problematic. The sides did not agree on the price of gas. Gazprom filed suit against Turkmengaz in the Stockholm Court of Arbitration with intention to revise the contract value of the purchased Turkmen gas as energy prices dropped in the world.

Turkmengaz announced that Gazprom has not paid for the already supplied Turkmen gas since early 2016. According to the Turkmen side, Gazprom simply went bankrupt because of the crisis and sanctions.

On one hand, the supply of gas in such small volumes has no role for the economy of both countries. Gazprom said in early 2015 that there is no technological need for the purchase of gas from abroad regardless of the source.

Gazprom said it is able to ensure both the needs of the market in any region of Russia and the supply of gas to its customers in Europe and, in the long term, in Asia, through own resources. Considering the fact that Russia, according to BP, ranks second in the world in terms of gas reserves - 32.6 trillion cubic meters, there's no point to doubt Gazprom's statement.

Gas supplies to Russia for Turkmenistan amounted in 2014, for example, to only one-third of total export volume, mainly due to the fact that more than 25 billion cubic meters were sold to China. In 2015, because of the significant reduction in exports to Russia, the share of export in Russian direction fell dramatically.

The fact that Ashgabat lost one of the export routes, which are only three, including China and Iran is important in the issue of termination of Turkmen gas deliveries to Russia. Of course, China remains the most important market, the demand for gas of which will only grow. For 10 years, the demand for gas in China increased by 4.5 times to 185.5 billion cubic meters in 2014.

There is another export route – Iran. Iran has huge gas reserves itself (34 trillion cubic meters, according to BP), which puts the country to the first place in the world. In addition, in the light of lifting of sanctions from Iran, the country may soon begin development of new gas fields and become from a partner to a competitor of Turkmenistan. So it’s not necessary to count on this route.

There may be another export route in the future – the construction of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline started in Dec. 2015, which will supply Turkmen gas to promising markets in South and Southeast Asia.

However, according to official statements, only the construction of this pipeline’s Turkmen section will last for 3 years. Building plots in the transit countries, counting security problems in the region, may take even more time. Therefore, this export route can be expected only in the long term.

It is most likely in such situation that Turkmenistan’s interest in European gas market will further increase. The Central Asian country has already done a great deal to supply gas to Europe.

The commissioning of the East-West gas pipeline in Dec. 2015, is intended to transport natural gas from the biggest deposit in the country’s eastern regions – Galkynysh – to European markets. Azerbaijan, Georgia and Turkey, lying on the route from Turkmenistan to Europe, are willing to be transit countries.

Many experts believe that for Turkmen gas, in order to become finally a reality in Europe, it’s only necessary the construction of a 300- km gas pipeline across the Caspian, which is not difficult from a technical point of view.

However, for this, Europe must become more resolute in its intention to get Turkmen gas and take part in the construction of the Trans-Caspian gas pipeline, in which is interested not less than Turkmenistan.

Otherwise, the statement of Maroš Šefčovič, Vice-President of the European Commission for Energy Union, about the plans to get Turkmen gas in 2019 will be nothing but populism. When Turkmen gas is released to the huge Southern and Southeastern Asian markets, Turkmenistan’s interest in European market can vanish.

Turkmenistan ranks fourth in the world in terms of gas reserves - 17.5 trillion cubic meters of gas. Currently, the country produces more than 75 billion cubic meters of gas per year, and it is planned to increase production to 230 billion cubic meters by 2030, most part of which will be exported.


Elena Kosolapova is Trend Agency’s staff journalist, follow her on Twitter: @E_Kosolapova

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