How Turkmenistan and Türkiye are preparing to replace Russian gas volumes in the EU
On March 1–3, the Antalya Diplomatic Forum took place in Turkey (Antalya). This is a relatively new, but at the same time quite large negotiation platform. This year more than twenty countries and eighty international organizations took part in it.
For Turkey, this is a good way to show its potential as a mediator in solving problems, declare its role in politics, and at the same time solve its economic problems.
One of these “multi-factor challenges” for Turkey is energy and related combinations. In Antalya, the President of Turkey and the Chairman of the People's Council of Turkmenistan G. Berdimuhamedov signed two basic documents in the field of natural gas supplies: the “Memorandum of Understanding” and the “Letter of Intent.”
The parties agree to make all necessary efforts to form a route from Turkmenistan to Turkey, both to meet domestic needs and to supply European consumers. In general, the ideas of the well-known Nabukko gas pipeline are going through another resuscitation session - the fifth in a row.
Unlike LNG supplies, pipelines are dependent on the number of players in the supply chain. If their interests are multidirectional, then it is quite difficult to create a large working project or replace an already working one.
It would seem that the European Union is a confederation that acts in many ways as a single player, but in the case of Russian gas supplies, the European superstructure cannot completely ignore the interests of Austria, Slovakia, and Italy. Ignoring, even with all the severity of the relationship, turns into a long, burdensome and costly process.
With Nabucco everything was exactly the same principle. It was necessary (depending on the iterations of the project) to align the interests of Turkey, Iraq, Iraqi Kurdistan, Iran, Azerbaijan, Turkmenistan, and Uzbekistan. Consider counterarguments from Moscow and Beijing.
In the case of Iran and Uzbekistan, it was necessary to take into account various sanctions trends; in the case of Turkey, it was necessary to overcome the resistance of a number of European consumers who did not want (some still do not want) Ankara’s strengthening in the European commodity market.
As a result, the big concept broke up into many local, although potentially large projects, of which the South Caucasus Pipeline - SCP or Baku - Tbilisi - Erzurum, the Trans-Anatolian Gas Pipeline (through Turkey) and the Trans-Adriatic Gas Pipeline became the ones that actually worked. "(Bulgaria - Italy).
The problem here was not only the labor intensity of laying pipelines through passes and valleys, but also the volume of raw materials from suppliers. So far, the actual volumes on these routes to the European market are ±10 billion cubic meters. m per year. Azerbaijan's capacity was and remains limited. It was necessary to gain access to really large volumes on a long-term basis, and this was either Russia, or Turkmenistan, or the southern fields of Iran, or the full development of fields in Iraqi Kurdistan.
Iranian volumes from the South Pars field fell first due to sanctions, and Iran itself, with limited financial resources, needed to supply gas primarily to its northern regions.
Iraqi Kurdistan could potentially produce up to 31 billion cubic meters. m per year, but the Kurdish deposits are pro-Iranian Sulaymaniyah, and there is also the traditional question: how to share income with Baghdad. For example, regarding the Kirkuk-Ceyhan oil pipeline, this issue comes up every year, and courts and proceedings are constantly going on.
Russian volumes were burdened by the political situation and decisions like the Third Energy Package, then, again, by sanctions. And volumes from Turkmenistan had to be transported either along the bottom of the Caspian Sea or through Iran. At one time, Turkmen gas flowed through the Russian system, but in the 2010s the parties did not reach an agreement, and Ashgabat began pumping gas to China.
For Western consumers, the most logical solution would be to lay pipes along the bottom of the Caspian Sea (the Trans-Caspian Pipeline project). The Caspian Sea is divided into two deep-water zones by a kind of ridge, which at first glance is the most comfortable in depth and length between Turkmenistan and Azerbaijan.
But this is on paper, but in practice the laying turns out to be extremely difficult in terms of technology, seismic resistance, and it is clear that Iran and Russia, as countries of the Caspian basin, will always find the necessary environmental arguments. Iran is directly aiming to work according to the principle - either you pull through us, or you don’t pull at all.
There are still more than one or two Western design structures related in one way or another to the ideas of the Trans-Caspian pipeline in the region, and they even receive regular funding. At summits (including the last one) between the EU and Central Asia, this route is mentioned regularly, but practical implementation is still a long way off.
Until 2022, everything would have continued in such a sluggish mode, adjusted for the fact that it was difficult, but the route from Iraq to Turkey was still being built. From the large Khor-Mor cluster, they decided to supply gas not only to the north of Iraqi Kurdistan, but to expand the network and continue the route through the province of Dahuk to Turkey.
But 2022 has arrived with all its events and changes. It became clear to interested players that sooner or later there would be no Russian volumes of pipeline gas in Europe.
Now it is already 2024, and the extension of the contract for the supply of gas through Ukraine, which is supplied to Hungary, Slovakia, Austria, and Serbia, is in question. It is possible that a temporary solution will be found, like the currently discussed possibility of Europeans purchasing gas on the Russian-Ukrainian border. But it is clear that all these are temporary options.
Player disposition
In this situation, the disposition of the players also changes. For Russia, the limiting factor in the western direction is domestic demand from Turkey, as well as the need to develop the LNG segment.
For Iran, the supply project to India and Pakistan is becoming important, as well as the optional possibility of connecting its southern reserves with projects in Iraq.
For the United States, one of the main tasks is to maintain some control over the region, if necessary, to withdraw forces from central Iraq. Here the most logical thing for them is to settle precisely in Iraqi Kurdistan, placing their controlling paw on the raw materials projects described above.
For Turkmenistan the situation is becoming completely unique. Even if the construction of the fourth line to China is completed, Ashgabat will still have colossal free volumes by world standards - up to 40 billion cubic meters. m per year. China may offer to build the fifth and sixth lines, but it simply does not have such needs. And we have a similar problem with the same “Power of Siberia” - China’s industrial growth is already far from past records, after Covid its needs are growing slowly, while consumption in the US and EU markets is not growing.
The solution for Turkmenistan would be another long-suffering project, which is also many years old - TAPI. Route from Turkmenistan through Afghanistan. However, for obvious reasons, there is no stable consortium of investors for it. As a result, in order to earn money, Ashgabat critically needs access to the western direction, which means it should talk with Turkey and Iran.
For Turkey, the most understandable and adequate policy here is to continue projects in Iraqi Kurdistan and build the Turkmenistan-Iran-Azerbaijan gas link with an eye to fully covering its own needs and replacing Russian volumes in Central and Eastern European countries. And it is no coincidence that the EU’s current needs are met by Russian supplies at the level of 22–25 billion cubic meters. m per year, and the volumes that Ankara and Ashgabat discussed in Antalya are 27 billion cubic meters. m per year.
Iran can also benefit quite handsomely here if part of the Turkmen gas remains in the Iranian system, and part of it, together with the gas supplied along the southern pipeline in a mixed form, goes to the “Turkish hub”, and it can go both through Azerbaijan and through Tabriz directly to Turkey. If Tehran, with the new (future) government of Pakistan, manages to bring the issue of the “Peace” highway to its logical conclusion, then Iran will receive a completely working energy circuit and diversified export revenues from both transit and production.
Objective conditions today are such that such a scheme is very, very realistic in the next two to three years.
There is no doubt that negotiations not only between Turkmenistan and Turkey, but also with the participation of Azerbaijan and Iran, will gain momentum, and it is obvious that the political management of the European Union is using them not only in terms of economic benefits, but also for propaganda purposes.
They say that Russia was bypassed from the southern direction, got rid of the dependence of “wrong gas molecules”, etc. But on the other hand, if you look at things objectively, since we entered into confrontation with the West, it is logical that our volumes will be there early or late replaced. Here you either enter into confrontation or not.
For other players, like Turkmenistan, Turkey or Iran, you need to think about yourself and how to earn your money.
At the same time, in terms of a kind of counter-propaganda, it’s worth thinking about, in general, what scale are we talking about?
This, depending on market fluctuations, is $12,5–14,0 billion in revenue distributed among all participants in the process.
In other words, we are talking less about financial indicators and more about political influence and raw materials as a truly geopolitical factor. Only in the framework of interaction and confrontation in Europe, supplies of even 180–200 billion cubic meters did not play a decisive role. m. This is, in general, a simple and good example when influence on the elites of other countries, of course, can be exercised through some important economic factor, but influence on many other things is also required.
In general, in our country, some kind of excitement usually begins when news, that someone (especially from the neighbors) is pursuing a trade route “bypassing Russia.” So, what difference does it make to us that the trade route is being pulled if there is no significant share of “Made in Russia” goods there? So, in fact, here too. Is there an EU gas market? Eat. Are we not filling it out? We don't fill it out. Someone will fill it out eventually.
This is all a rather strange paradigm that has been hanging around in our heads for years: trade routes, raw materials supplies. But in the same Central Asia, investors are waiting for projects on rational water use, electricity and heat generation, modernization of electrical networks, construction of railways, tunneling, and growing needs for mechanical engineering products.
And if we take it further south, there is a general water disaster in Iraq, and by fighting it, billions of proceeds can be collected from what regional players will send to Europe, replacing Russian raw materials.
That is, the question here is in the way of thinking (what and how to earn money) and goal setting. Well, regional players will send gas to Europe along the given southern corridor and earn some money, so the task of a smart player is precisely to “help them manage their earnings correctly.” This is exactly how Europe worked towards us, and this is exactly how we should work ourselves.
Information