Turkey has lost its imports of Iranian natural gas and is again looking to Turkmenistan to cover the gap.But Ashgabat appears to be prioritizing exports to China.
The ongoing turmoil in the Persian Gulf has sent global gas prices soaring, a development that inevitably has led to a sudden resurgence of interest in Turkmenistan’s large natural gas reserves.
Speaking at an energy conference April 24 Turkish Energy Minister Alparslan Bayraktar repeated his recent call for urgent international discussions on reviving a long-debated, never-built trans-Caspian pipeline to carry Turkmen gas to Turkey and on to Europe. “We believe it is absolutely necessary to realize a pipeline that will transport Turkmen natural gas from the Caspian Sea to Türkiye and from Türkiye to Europe,” he said.
Ankara has good reason to be renewing interest in a Turkmen gas-filled pipeline across the Caspian.Turkey imports over 80 percent of its gas, the cost of which has risen by around 70 percent already this year, the same price hike faced by Europe.
On top of this inflationary spike, imports from Iran which supplied around 15 percent of Turkey’s gas needs stopped sometime in March as a result of the conflict in the Gulf.
Ankara’s previous effort to import Turkmen gas via a ground-breaking swap deal with Iran foundered last year after just three months when Washington expanded its Iran sanctions regime to include such types of deals.
The Turkmen-Turkish-Iranian arrangement allowed for just 1.3 billion cubic meters (bcm) of Turkmen gas to reach Turkey by the end of 2025.Turkey had hoped to increase the volume to up to 3 bcm this year.
Even assuming Washington decides to allow exports of either Iranian or Turkmen gas to Turkey to restart, it is unclear whether Iran’s gas pipeline system remains sufficiently operational to fulfill a new swap deal.
A dedicated gas pipeline to carry Turkmen gas across the Caspian Sea to Azerbaijan, and on to Turkey and Europe, seems like an obvious option to ensure long-term gas supplies for Turkey and the rest of Europe.
Such a pipeline has been discussed periodically since the late 1990s, but despite strong interest, nothing has materialized in part because both Turkey and Europe found it was cheaper to bring gas from Russia and Azerbaijan, while Baku sought to prioritize its own exports over possible transit of Turkmen gas.
Turkmenistan’s insular, isolationist leadership also never provided firm assurances that the country would supply a trans-Caspian route with the volumes needed to ensure economic viability.Now with gas prices soaring because of the Gulf conflict, which has exposed the Strait of Hormuz as a strategic bottleneck, the European Union is confronting a gas supply quandary.
Brussels is pushing ahead with plans to halt its last Russian gas imports by November 2027.Meanwhile, Azerbaijan, which the EU believed could make up for Russian supplies, is far behind in its plans to boost gas production and export.
Under the circumstances, this leaves Ashgabat with a window of opportunity to become a substantial gas exporter to Europe.Factors beyond those created by the turmoil in the Gulf appear to increase the odds slightly that a trans-Caspian route can be built.
Azerbaijani President Ilham Aliyev confirmed three years ago that Baku could allow the transit of Turkmen gas, as long as it did not use Azerbaijan’s existing Southern Gas Corridor (SGC) pipelines.
Baku also indicated it would not help finance the construction of any additional pipeline capacity.At that time, Azerbaijan had committed to significantly ramp up gas supplies of its own to the EU, so new pipeline construction seemed necessary to accommodate any potential Turkmen gas flows to Europe.
Since then, however, Azerbaijan’s gas output has not expanded much, and SGC lines currently operate at around 50 percent capacity.Still, even if there is room enough for Turkmen exports in existing routes, the cost of a trans-Caspian pipeline is an obstacle.
The price is estimated at $12 billion.A major question, then, centers on the risk tolerance of international investors, given the high level of uncertainty concerning Iran, the Persian Gulf and CaspianBasin.
A direct pipeline across the Caspian linking Turkmenistan to Azerbaijan would be only around 300 kilometers long, but it would run between the 740-kilometer coastline of Iran and the 695-kilometer coastline of Russia.
Both countries have strong reasons to view a pipeline carrying Turkmen gas to Europe as not being in their own best economic interests.No less significant are questions over how committed Turkmenistan is to such a pipeline.
The first clear hint that Ashgabat might be interested in a trans-Caspian route occurred only in 2023.There have been other periodic expressions of interest since then, but nothing concrete.
Over the past three-plus years, little has happened, with Turkmen officials seemingly preferring not to lobby for the project.Ashgabat’s focus has remained on China, with which it is celebrating 20 years of energy export cooperation, including the export of 460 bcm gas since 2009.
In March, Turkmenistan’s paramount leader Gurbanguly Berdymukhamedov visited Beijing.After his meeting with Chinese leader Xi Jinping, China’s official Xinhua news agency published a report saying the two had vowed to expand cooperation in the “natural gas sector and elevate trade and investment levels.” Chinas National Petroleum Corporation (CNPC) recently was awarded a contract to design and build facilities for phase four of development of Turkmenistan’s giant Galkynysh gas field which is projected to yield 10 bcm per year, all of which is earmarked for export to China.