Gazprom can start buying Turkmen gas and become an alternative to Europe

Gazprom can start buying Turkmen gas and become an alternative to Europe

Russian Gazprom can start buying Turkmen natural gas in order to reduce the possibility of the project for the transport of natural gas from Turkmenistan to Europe, via the Caspian Sea. A number of experts came to this conclusion, since the Convention on Legal status of the Caspian Sea greatly facilitates this project.

The Convention provides that coastal countries can lay pipelines along the bottom of the Caspian Sea. At the same time, it is stipulated that “the definition of the route for laying pipelines is carried out in agreement with the party through the bottom sector of which a pipeline should be carried out”.

Turkmenistan, Azerbaijan, EU, Turkey and Georgia have been working for a number of years to organize the export of natural gas from the Caspian region. The participants of the project believe that the convention will allow the construction of the Trans-Caspian Gas Pipeline along the Caspian subsea between Turkmenistan and Azerbaijan, and link Turkmen natural gas to the Trans-Anatolian Natural Gas Pipeline (TANAP). This gas pipeline is designed to transport gas from Azerbaijan via Georgia and Turkey to the Greek border, where it would be connected with Trans Adriatic Gas Pipeline (TAP) to transport natural gas to South Europe.

According to the most optimistic forecasts for these gas pipelines, natural gas will be supplied to Europe by 2019-2020. At the first stage, it will be Azerbaijani gas. Then, after the construction of the Trans-Caspian Gas Pipeline, Turkmen natural gas will flow through TANAP and TAP. The signing of the Convention on the Legal Status of the Caspian Sea makes this scenario quite realistic.

Here it is necessary to ask a reasonable question, what should Gazprom do in the situation when the construction of the Trans-Caspian Gas Pipeline becomes a reality?

Now Russian energy market experts are vying to convince each other that Turkmenistan does not have gas available for Europe, since, as they say, all gas volumes are pumped to China.

They are mistaken, and we will try to help them. Until 2009, Gazprom purchased 45-50 billion cubic meters of natural gas in Turkmenistan. Then the Russian gas giant gradually reduced its purchases of Turkmen gas and stopped buying Turkmen gas early in 2016.

What happened to the 45-50 billion cubic meters of natural gas that used to export to Russia? If you believe Russian experts, it were exported to China. However, at present it is technically impossible to redirect the capacities of the fields that supplied Russian direction, to the Chinese one. The pipeline to China is supplied with gas from another group of gas fields.

Therefore, Turkmenistan has a gas, the one that should go to Russia. Now it is a kind of strategic reserve of the country.

Turkmenistan over these years built on its own the East-West pipeline in order to be able to quickly move the gas reserve to the west of the country, to the coast of the Caspian Sea, the start point of the Trans-Caspian Gas Pipeline.

Now, when the Convention on the legal status of the Caspian is adopted, and the construction of a gas pipeline along the seabed becomes a reality, it is reasonable to ask whether the position of Gazprom to the issue of resuming purchases of Turkmen natural gas will change.

What is more profitable? To wait until Turkmenistan starts the implementation of the project for export of its gas to Europe, or, on mutually beneficial terms, to resume gas purchases in Turkmenistan and reduce the relevance of the Turkmen participation in the Southern Gas Corridor project.

Experts say that the pipeline route to Europe via Russia is shorter than via Azerbaijan and Turkey, and the infrastructure has long been built and operates. Gazprom may offer to buy Turkmen gas at the border or transport it to Europe. Thus, the Russian holding will significantly reduce the potential of the Southern Gas Corridor, and will be able to earn on controlled deliveries.

In addition, in late July, Deputy Energy Minister of Russia Anatoly Yanovsky said that negotiations with Turkmenistan to resume gas purchases of Turkmen gas by Gazprom could begin in the autumn.

All these factors allow experts to assume that, with a high probability, Russian purchases of Turkmen natural gas are likely to resume in 2019.