Innokentij Adyasov: Does Turkmenistan Have Enough Resources for the Trans-Caspian Gas Pipeline?

By actual freezing of NABUCCO project the attempts (starting from mid of 2011) to rehabilitate already forgotten (for the first time the idea of such gas pipeline was announced in 1996) project of the Trans-Caspian gas pipeline have intensified. In March 2012 the President of Turkmenistan Gurbanguly Berdymukhamedov visited Ukraine.  In Kiev for uncovered joy of Ukrainian authorities Berdymukhamedov announced the idea of construction of the pipeline Turkmenistan-Azerbaijan-Georgia (with optional branch to Ukraine) – Turkey – the European Union (EU) for supplies of gas to Europe by-passing Russia. The capacity of planned gas pipeline should comprise up to 25 billion cubic meters of natural gas annually.

Long-lasting preparatory work preceded the visit of Turkmen President to Kiev: Ashkhabad together with Baku and the EU experts designed a road-show for potential gas pipeline investors. In March 2012 the representatives of US business expressed potential desire to assist Turkmen authorities in diversification of natural gas export to the world market and in accomplishment of piping of new transnational pipelines round “north direction”, i.e. by-passing the territory of Russia. This was discussed during the talks in Washington of the members of Turkmen delegation with the managers of a number of leading oil and gas American companies, in particular such as Chevron, Exon Mobil, Conocophillips.

It’s noteworthy, that earlier diplomatic and economic activity of Washington and Brussels within Turkmen direction was targeted at inclusion of Ashkhabad into NABUCCO project. However, the experts immediately had one question: whether Turkmenistan has enough resources to provide gas for the new mega-project? Information on real and investigated stocks of blue fuel in Turkmenistan is probably the main and mostly protected secret of Ashkhabad. Turkmen authorities prefer to refer on the data of the second stage of a formally independent expertise of British company Gaffney, Cline & Associates. The expertise showed that the stocks of gas in the Republic comprise more than 71,21 trillion tons. Earlier they were estimated over 44,25 trillion tons. Almost half of the total stock of gas is focused in the field South Iolotan, which is the main resource base for filling of pipeline Turkmenistan – Uzbekistan – Kazakhstan - China commissioned in 2009. Gaffney, Cline & Associates considers South Iolotan to be the second biggest gas field in the world, estimating the stocks of fuel at the level of 26.2 trillion cubic meters. Grounding on this data and considering that by 2030 Turkmenistan plans to increase annual production of oil up to 67 million tons, and gas up to 220 billion cubic meters annually occurs  a question on diversification of exporting ways. However the conclusions of British company were immediately doubted by independent experts.

Except for that it is unclear which investments shall be urgent to develop potential gas fields.

Today Turkmenistan exports its natural gas to Iran, Russia and China. According to the information given by the government of Turkmenistan for past 2011 the scopes of natural gas export grew for 75.2%. In comparison with the same period of 2010 the growth of condensed  gas and oil production in the country comprised 107.9%, the scopes of blue fuel production grew for 42.5%. In 2011 Turkmenistan exported to Russian about 10 billion cubic meters of natural gas (in the beginning – middle of past century the scope of export exceeded 50 billion cubic meters of gas). Such acute reduction of Turkmen gas export to Russia is primarily related to the increasing by Ashkhabad of the prices for blue fuel up to average European (excluding transit) and reduction of purchasing of natural gas by Ukraine – earlier it mainly was supplied by “Gazprom” with blue fuel at the cost of re-export of natural gas from Turkmenistan. Iran planned to buy in 2011 from Turkmenistan about 14 billion cubic meters of gas (till now there has been no certain information on the real scope of gas export to Iran in 2011). But the main scope of Turkmen gas export went to China.

According to official information, they delivered 17 billion cubic meters of gas to Tianxia, in 2012 export should cover already 30 billion of cubic meters and by 2015 to reach up to 65 billion cubic meters due to extension of pipeline capacities.

Despite all the professions of official Ashkhabad on involvement of new fields, the experts are sure that export to China is assured at the cost of those scopes of natural gas which earlier went along the north direction to Russia. But a question arises about financial efficiency of Turkmen gas export to China. As per the estimations of the experts, China pays Ashkhabad only 170-180 USD per a thousand of cubic meters of gas, by this significant part of payments is made with Chinese goods. As a result, Turkmenistan supplies its gas to China at the lowest price in comparison with other buyers, and Chinese direction can’t cover financial losses from gas supplies to Russia.
Turkmenistan is not able to refuse of such low price on the gas supplied to the Tianxia  - field development (to be more precise maintenance of production level at old ones) and pipeline construction was performed with Chinese credits.

Ashkhabad, Baku and the EU by launching of the “Trans-Caspian” project counted on participation of Kazakhstan in this pipeline. Official invitation from the European Union to take part in the Trans-Caspian gas pipeline was received by Kazakhstan on October 4th 2011 in course of the VI European Forum Kazenergy in Astana, and was announced by the EU Energy Commissioner Günther Oettinger.  Almost immediately Oil and Gas Minister of Kazakhstan Sauat Mynbayev declared that his country didn’t possess free resources to fill in the Trans-Caspian line. It’s noteworthy that earlier it was suggested to pipe a line of the gas pipeline from Kazakhstani Tengiz to Turkmen TürkmenbaĊŸy.

The same as in case of Uzbekistan, main export supplies of Kazakhstani natural gas (up to 15 billion cubic meters) shall flow to China.

Despite evident troubles with resource base, the EU continues to support all gas pipelines projects from Middle Asia and Azerbaijan alternative to Russian ones. By this the “Trans-Caspian” project is suggested to consideration only as a part of NABUCCO project in its broad meaning. Even a new definition has been created – “South Corridor”, probably to oppose the “North Corridor” running along the territory of Russia. “The line of the European Union of “South Corridor” project hasn’t changed. We still would like to accomplish this project as soon as possible, without any delays”, - stated the Head of the EU Delegation in Azerbaijan Roland Kobia in the middle of April.

Regarding the talks on legal basis of the Trans-Caspian pipeline accomplishment (as known Russia decisively opposes the construction of any pipelines along Caspian Sea before its status is determined), Kobia reported that the talks go on. Several weeks ago the last fall was held, during which definite progress was observed. Another fall shall take place in a few weeks in Brussels or maybe Vienna. We encourage participation of the both parties in the talks – Turkmenistan and Azerbaijan”, - underlined the diplomat. “We heard positive statements of SOCAR, noting that construction of the Trans-Caspian pipeline is a bilateral issue between Azerbaijan and Turkmenistan, and it shall not create any legal or ecological problems. We assume that this project is the business of two states and no one should interfere into this process. There are already two thousand kilometers of the pipeline in Caspian Sea, and we don’t think that this projects shall seriously affect its ecology ", - added the EU Representative. According to Kobia, the Trans-Caspian gas pipeline is a part of NABUCCO gas pipeline and logically is included into the definition of “South Corridor ".

All above described facts let us conclude that the project of the Trans-Caspian gas pipeline is yet, and obviously will for a long time, be of propaganda character first of all. The main objective of the “Trans-Caspian” project is not to allow finalization of talks on construction of Russian “South Stream” which shall enter into final stage in summer-autumn of 2012. In case of successful launching of the “South Stream” project the project of the Trans-Caspian gas pipeline could be crossed out.
Translated by EuroDialogueXXI from regnum.ru