However, there was still a crucial piece missing from this puzzle: a pipeline connecting the eastern shore of the Caspian Sea with its western shore. After decades of discussions, this project could finally become a reality.
Turkmen and Turkish politicians agreed last week to dramatically increase their gas trade volumes over the next two decades. They had previously signed an initial agreement to strengthen energy cooperation in March 2024.
First, Turkmenistan will begin exporting 2 billion cubic meters of gas to Turkey annually under a swap deal with Iran. Under this agreement, Turkmenistan will send gas to Iran, which will then send the same amount of gas to Turkey through another pipeline network. However, both sides agree that to increase gas trade, a new pipeline will ultimately be needed. This is where the construction of a Trans-Caspian pipeline comes into play.
Both countries will benefit significantly from increased energy cooperation and the construction of a Trans-Caspian Pipeline to supply gas to global markets. Turkmenistan is said to have the world’s fourth-largest natural gas reserves, but remains one of the world’s poorest countries. The continued failure to diversify its economy, attract foreign investment, and find new markets for oil and gas has created a poor economic environment. A Trans-Caspian Pipeline and the foreign investment it would bring would be a step in the right direction to get the economy back on track.
At the same time, Turkey is striving to establish itself as the region’s main energy hub. The gas contract with Turkmenistan and the construction of the infrastructure needed to bring Turkmen gas to Turkey and from there to world markets would underpin this goal.
The wider region would also benefit from a Trans-Caspian pipeline. Since Russia’s invasion of Ukraine in February 2022, the EU has been looking for alternative energy sources, especially natural gas. There is already an agreement with Azerbaijan to double the amount of gas supplied from Baku to Europe via the existing pipeline network by 2027. But even that will not be enough to meet Europe’s growing energy needs. Direct access to Turkmen natural gas could play an important role in improving the bloc’s energy security.
But building a Trans-Caspian pipeline is easier said than done. After all, discussions have been going on for decades without any significant progress. Fortunately, the challenges are not technical in nature. The distance between Turkmenistan and Azerbaijan is relatively short, and the depth of the pipeline would not be a major factor. Instead, geopolitical constraints have prevented construction.
As Caspian neighbors, Iran and Russia have been blocking the project for years. Their official reasons are environmental concerns, including the potential impact on the increasingly fragile Caspian Sea ecosystem. However, the real motive may be that neither country wants to compete with Turkmenistan’s gas exports.
Another challenge is Turkmenistan’s unwillingness to diversify its energy exports and attract the foreign investment required for such a large pipeline project. Currently, almost all of Turkmenistan’s gas exports go to China. Despite the construction of a pipeline connecting Turkmenistan’s main gas fields to the Caspian Sea, Ashgabat is reluctant to move forward with the construction of a Trans-Caspian pipeline.
Another challenge comes from Europe. While European politicians and officials often talk about developing alternative energy sources outside Russia, they have been slow to sign the agreements and treaties necessary to achieve this goal. The EU needs to play a more active and direct role in the region and start signing treaties if it wants countries to produce more energy to export to Europe.
Finally, there is the question of capacity. The existing natural gas pipeline network, the Southern Gas Corridor, connecting Azerbaijan to Italy, will be at full capacity by 2027. Even if a Trans-Caspian pipeline were built and completed, it is unclear how much additional gas could reach Europe. This means that any discussion of building a Trans-Caspian pipeline must also take into account the new infrastructure connecting it to the rest of the world. While this may pose a significant challenge, it also presents an important opportunity.
Due to tensions with Azerbaijan, Armenia has been excluded from all regional energy and transport infrastructure projects for decades. With the normalization of relations between Armenia and Azerbaijan now closer than ever, this is an opportunity to help Armenia integrate into the regional energy and transport infrastructure for the first time in decades. Any new pipeline system should consider including Armenia. Such an ambitious project could contribute to regional integration and build trust between old adversaries.
A pipeline is the only economically viable way to transport natural gas across the Caspian Sea. Transporting it by ship as liquefied natural gas is not profitable over such a short distance. There is no better time to push ahead with the construction of a trans-Caspian pipeline. Russia and Iran are less focused on the Caspian Sea due to challenges elsewhere, and Europe urgently needs new energy sources.
Turkmenistan and Turkey, together with their regional partners, have the opportunity to reshape the energy landscape on the Eurasian mainland. Time will tell whether their promises will finally be put into action.
Luke Coffey
